Last year, the IRS extended the tax deadline to July 15 to accommodate filers during the coronavirus pandemic. While the pandemic is still very much with us, the IRS won't be offering the same flexibility this year. Taxes are due on April 15, as they are every year unless the 15th happens to fall out on a weekend or holiday.
At this stage of the game, you have plenty of time to complete your taxes by that April 15 deadline. But what if you're a natural procrastinator, or the weeks just get away from you? Is there a penalty for filing your taxes late? Here's what you need to know.
Consequences of missing the filing deadline
If you're late filing your taxes and the IRS owes you money, there's no penalty per se, but you will delay your own refund, which could be bad if you need that money to pay immediate bills. If you owe money on your taxes, however, then it's a different story.
If you miss the filing deadline and owe money, you'll be hit with a failure-to-file penalty that will total a minimum of $435 -- but it could get much worse. The IRS can either charge you $435 or 5% of your unpaid tax bill for each month or partial month you're late -- whichever is higher. This means that if you owe $5,000 in taxes and are two months late, you can be charged $500 for not filing your return on time.
In addition, you'll face a late filing penalty equal to 0.5% of your unpaid tax debt per month or partial month you're late. That penalty also applies when you file your taxes on time but can't pay your bill on time.
What to do if you think you'll be late
You may be inclined to hold off on meeting with a tax preparer until the coronavirus situation improves and you're more comfortable being in a room with another person. Unfortunately, you can't use that excuse to be late with your taxes.
You can, however, request a tax extension if you think you won't have your return ready by the April 15 deadline. A tax extension won't give you more time to pay your tax bill, so if you owe the IRS money but don't pay that debt in full, you'll face a late filing penalty. However, as long as you get that extension, you won't face the dreaded failure-to-file penalty, which can be much more substantial.
A tax extension will give you six extra months to submit your return to the IRS. You don't need a specific reason to request one. Therefore, if you can't meet the April 15 deadline, consider an extension as a backup plan. You will, however, need to ask for that extension by April 15.
Don't be late
Being late with your taxes isn't ideal in any scenario. If you owe money, it can result in penalties. If you're owed money, it can result in delays.
Since there's plenty of time to get your taxes done between now and April 15, do yourself a favor and schedule a meeting with your tax preparer now. Many professionals are able to meet with clients remotely and receive tax documents through secure portals. That means you can complete your return on time without compromising your health.