Every year, all taxpayers are required to meet a tax deadline, which typically falls on April 15. What happens if you didn’t hit the tax deadline this year? What should you do? This article will provide more detailed information on this specific topic.
What Happens If You Miss the Tax Deadline?
If you didn’t hit the tax deadline this past April 15, the immediate consequences that will apply to you are:
Failure-to-file penalty: Missing the tax deadline places you in the failure-to-file category. This means that you’ll receive a penalty. The penalty is 5% of the unpaid taxes for each month or part of the month when the return is late, with a maximum penalty of 25%.
Interest accrues on unpaid taxes: Interest begins to accrue on the due date. The interest rate is determined quarterly, based on the federal short-term rate plus 3%.
Loss of refund if you don’t file within three years: Failure to pay on time risks losing a tax refund. There’s a three-year window following the original filing deadline. For example, if you have a $1,000 tax refund for the year 2024 and don’t file by April 15, 2028, you’ll lose it permanently.
First Steps You Should Take If You Didn’t Hit the Tax Deadline
1. File as Soon as Possible
The best course of action after missing the deadline is to file immediately. Filing as soon as possible will help you avoid accruing the penalty. The longer you wait, the more the penalty you’ll face.
2. Pay What You Can Immediately
If you can pay your taxes in full, that’s great. But if not, pay what you can right away. Whatever amount you pay will reduce the failure-to-pay penalty.
Partial payment also demonstrates good faith on your part, which may be helpful in future interactions with the IRS.
3. Apply for a Payment Plan (Installment Agreement)
If paying in full isn’t an option, consider applying for a payment plan to help you manage your taxes more effectively and reduce the penalty. For example, an Installment Agreement allows taxpayers to repay their debts over time while reducing the monthly failure-to-pay penalty to 0.25%. A payment plan also prevents aggressive IRS collection actions, such as levies and wage garnishments, allowing you to manage your debt with less scrutiny.
Consider Filing for Penalty Relief
First-Time Penalty Abatement (FTA)
You may be eligible for First-Time Penalty Abatement (FTA) if this is your first time missing the deadline. Certain penalties may be waived if it’s proven that this is the taxpayer’s first offense.
However, there are specific requirements to be eligible for this option. These include having a clean compliance history, such as no other penalties for the previous three tax years, filing all required returns for the current and prior years, and paying or being enrolled in one of the IRS’s approved payment plans for the taxes owed.
Reasonable Cause Relief
If you missed the tax deadline due to circumstances beyond your control, such as a natural disaster, illness, or severe financial hardship, you may qualify for reasonable cause relief.
Like FTA, reasonable cause relief allows taxpayers to avoid penalties for missing the tax deadline. Unlike an FTA, however, reasonable cause relief is not restricted to first-time offenders.
You must provide documentation to support your claim of circumstances, such as disasters, serious illness, or severe financial hardship. This includes medical records or doctor’s statements, FEMA reports or insurance claims, as well as financial bank records or statements.
What If You Haven’t Filed Taxes for Several Years?
What if you haven’t filed your taxes in several years? The best step is to stop ignoring the problem. The longer you wait, the more costly and complicated the problem will be. Failing to file your taxes can result in aggressive actions, such as levies and wage garnishment, and jeopardize your situation, including social security benefits, loan approval delays, or even criminal charges.
If you haven’t filed your taxes in years, contact Greenberg Law Group. A professional’s assistance is crucial in properly navigating the issue and determining the best course of action based on your specific situation, thereby preventing the problem from escalating. Allow us to assist you in determining the best course of action to get you out of trouble.
Avoiding This Problem in the Future
As you can see, missing tax deadlines can result in significant fines and a complicated situation. Avoid missing deadlines by creating a reminder system, such as marking key dates on your calendar or setting digital reminders, to stay easily informed of critical tax deadlines.
Furthermore, if filing your taxes by April is impossible, you can apply for a six-month extension using IRS Form 4868. This will push the deadline to October 15. However, note that the extension only applies to filing taxes, not payments.
Greenberg Law Group P.A. Is Here to Help
Greenberg Law Group, P.A. is your go-to partner for tax matters! We understand the process and can communicate with the IRS on your behalf, ensuring that each step is tailored to your specific tax situation. If you didn’t hit the tax deadline and want to find the best solution to the problem, a well-thought-out strategy and effective communication are essential. This is where a tax attorney can help! Reach out to us today, and we’ll help you get your taxes in order, reducing stress and providing you with more peace of mind.
