With the April 15th tax filing deadline looming, taxpayers often begin to wonder what their options are if they believe they will be filing taxes late. Every year, last minute tax filers scramble into their tax professionals’ offices and, in many cases, stand in long lines to mail their tax forms before the cut-off point. Nevertheless, the same two recurring questions emerge at tax preparation offices across the country as tax season comes to a close: is the last minute hassle really necessary? What happens if a taxpayer does not meet the deadline?
April 15th: Hard or Soft Deadline?
In general, April 15th is a hard deadline by which U.S. citizens and residents who are required to file an income tax return must do so. An exception to the April 15th guideline is in place for years in which the 15th is a Saturday or Sunday. In these instances, tax returns are due the following business day. Those who do not file by the deadline are subjected to a penalty that is equal to five percent of the taxpayer’s net tax liability. The penalty is applied to each month or portion of a month the tax return is late. For example, on a return that is filed eight months late, the IRS would assess a 40 percent penalty. However, the maximum penalty amount cannot exceed 25 percent of the taxpayer’s overall tax liability.
When Must Tax Liability Be Paid?
In addition to being the deadline for filing taxes, April 15th is also the date by which tax liabilities must be paid. Taxpayers who do not pay their tax liability by the due date will be assessed a penalty of 0.5 percent for each month or fraction of a month the payment is late. Like the failure to file penalty, the failure to pay penalty is capped at a maximum of 25 percent of the overall outstanding tax.
What to Do If You Are Filing Taxes Late?
Individuals who will be filing taxes late may request an extension. Taxpayers or their tax preparer may file an extension request form online or by mail. The extension delays the filing date by a period of six months from the original due date. It is important to note that although the filing date may be extended, taxpayers must still pay their taxes by April 15th to avoid penalty.
