Options For Filing Your Tax Return Late - Tax Professionals Member Article By Tiffany Gaskin
Posted by Tiffany Gaskin

Options For Filing Your Tax Return Late

Options For Filing Your Tax Return Late

It's pretty easy to get the IRS to give you more time to file your tax return after the tax filing deadline. But there are plenty of other things you'll need to do if you're filing taxes late.

How to get a tax extension

  • File Form 4868.

  • Set aside money for interest.

  • Be prepared to pay a fine of 0.5% per month for overdue tax arrears.

  • Be sure to submit your return before the October expiry date.

  • Pay attention to special situations that give you an automatic extension.


Get the Form

This is the easy part. Simply file Form 4868 before the tax filing deadline, and you will receive a tax extension until October. But the work does not stop there.


Set money aside for interest

When requesting an extension, make a good estimate of what you owe the IRS and send some or all of that amount with the extension request. If the estimated payment you send is less than the amount due, you'll have to pay interest for the difference. "Interest flows until you pay taxes. Even if you have a good reason for not paying on time, you still owe interest," the IRS says on its extension form.


Be prepared to pay a tax penalty yourself.

The IRS penalty for late payment is normally 0.5% per month of the unpaid tax up to the tax due date. The maximum penalty is 25%.

You catch a break on the penalty if you have paid at least 90% of your actual tax within the tax filing deadline and pay the rest with your tax return. The IRS can also let you off the hook if you can show "reasonable reasons" for why you didn't pay on time, even though you must attach a written statement to your return.


Mark October 15 in your calendar

If you receive an extension, October 15 is the last day you can file your return and pay your outstanding balance. Don't miss the deadline! Otherwise, the IRS can penalize you with a penalty of 5% of the amount owed for each month or partial month in which your return is delayed. This means that if you owe an additional $1,000, you may incur a penalty of $50 for each month after October that you wait. The maximum fine is 25% of the amount owed. In our example, that might mean spending an extra $250.

If you file your taxes more than sixty (60) days late, you'll pay $435 (adjusted for inflation) or whatever you owe, whichever is lower. And remember, this is in addition to what you still owe in taxes.

The good news is that the IRS can give you a lifeline: you may not have to pay the late-payment tax penalty if you have a "reasonable explanation" for filing late, so you'll need to again attach a written explanation about yourself.

Also, you don't have to wait until October to apply. Get your tax life in order, deposit, and pay as soon as possible, and you'll pay less interest.


Relax if you're overseas or in the military

For almost anyone filing late taxes, forgetting to apply for an extension is a big no-no. But if you're an American citizen or a resident who's lived and worked abroad when your tax return expires, you automatically have two more months to file your tax return and pay any amounts you owe without having to request an extension. People affected by certain natural disasters can also automatically benefit from more time. Some soldiers have even longer time, depending on where they are and what they're doing.


Keep your chin up

Procrastination isn't the only reason taxpayers get extensions. For instance, many investors do not receive K-1s, which represent partnership income, until the tax return expires.

So assuming you remember to apply for an extension before the deadline, filing your taxes later won't put some red flag on your "record."


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Tiffany Gaskin
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