The pandemic has complicated everything, so why shouldn’t your taxes be any different? This year, the deadline to file 2020 taxes is May 17, 2021, but even with the extra month, filing on time may be a challenge.
So, what’s next if you miss the tax deadline? First thing is, don’t worry. It’s not the end of the world, however hefty penalties could apply if you don’t take the necessary steps to filing your taxes. Here are different ways you can minimize the penalties and interest if you file your taxes after the deadline.
E-File Your Return
If you miss the deadline, the most important thing you can do is file your tax return quickly, and e-filing is the way to make that happen. Typically, e-filing services are available through October 15 which is also the deadline for filing late if you requested an extension.
If you don’t file for an extension by the tax filing deadline, you will have to pay a “failure-to-file” penalty (5% of the amount of taxes you owe for every month your return is late, up a to maximum of 25%). The penalty for filing late is ten times higher than the penalty for paying late, so you want to get your return filed as soon as possible!
Pay What You Can
If you are unable to pay your tax bill in full, pay as much as you possibly can to minimize the penalties and interest. Need additional time to pay? The IRS has different payment plans available for both individuals and business owners; your eligibility based on the amount you owe. Penalties and interest will still apply until the tax bill is paid in full, but if you’re making payments, you will not be subject to any additional collection actions.
The IRS wants their money, but they’re not heartless and recognize that special circumstances may prevent you from filing your return on time. For example, if you’re a U.S. citizen and have been out of the country during the filing deadline, you are automatically granted an additional two months to file your return without having to pay penalties. If you still need more time to file, you can request a four-month extension.
Penalties may also be waived if you couldn’t file your taxes on time because of a situation that was beyond your control, i.e., you had major surgery or an emergency that required you to travel.
You Just Don’t File
Under no circumstances is not filing your taxes a smart move. Period. While it may take several months or even years for the IRS to notice that you didn’t file your taxes, the tax man will eventually come calling.
Typically, you will receive a notification letter that you have an outstanding tax liability. However, at this point, you may have already racked up significant penalties, interest, and late fees. Other consequences may include a lien on your property, target of a tax audit, even jail time.
Maggi Tax Advisory & Financial Group is here to help with your 2020 tax return!
Need help filing taxes this year? Contact the financial advisors at Maggi Tax Advisory & Financial Group today to schedule a consultation. We can be reached at our greater Tampa Bay locations: Hillsborough at (813) 850-0131, Pinellas at (727) 351-6168, and Pasco at (727) 351-6168.