Miss the April 15 IRS Income Tax Deadline? Don’t Panic

So, what can a taxpayer do if they didn’t file in time, but they also don’t want to keep their head buried in the sand?

Resources: Links to all state tax agency websites Info for state income tax extension

For most Americans who are owed a tax refund by the IRS, there’s no need to panic. The tax agency doesn’t assess penalties when a taxpayer is owed a refund, since it is based on a percentage of the amount owed.

Another bit of good news: A taxpayer won’t necessarily lose their potential refund since they actually have three years to claim back tax refunds for the 2018 tax year. And this can even be extended to October 15, 2018. For those who haven’t filed for more than one year, however, the IRS may hold a refund if it appears the taxpayer may owe taxes from a previous year.

For taxpayers who do owe taxes to Uncle Sam this year and didn’t file or get an extension before April 15, the best advice is to file your federal 1040 and state returns as soon as possible, even if unable to pay the tax bill right away. This is because the late-filing penalty can be up to 10 times higher than the late-payment penalty. So the longer you wait, the worse it gets.

The Penalties for Filing Late

• There is no penalty if you’re getting a refund, as long as you file within the 3-year time-frame.
  • After 3 years, the “penalty” is forfeiture of your tax refund, as mentioned above.
• There is no penalty if you filed an extension and paid any taxes owed by April 15, as long as you finish filing your return by the October 15 deadline.
• A late filing penalty applies if you owe taxes and didn’t file your return or extension by April 15.
  • This penalty also applies if you owe taxes, filed an extension, but didn’t file your return by October 15.
  • The late filing penalty is 5% of the additional taxes owed amount for every month (or fraction thereof) that your return is late, up to a maximum of 25%.
  • Tip: The late filing penalty is 10 times higher than the late payment penalty. If you can’t pay your tax bill and didn’t file an extension, at least file your return as soon as possible! You can always amend it later.
• A late payment penalty applies if you didn’t pay your taxes owed by April 15, whether you filed an extension or not.
  • The late payment penalty is 0.5% (1/2 of 1 percent) of the tax owed amount for every month (or fraction thereof) the owed tax remains unpaid, up to a maximum of 25%.

The Risks of Not Filing at All

Taxpayers who fail to file will likely receive a letter from the IRS reminding them of the missing return, especially if they are a wage earner who receives a Form W-2 or a contractor who receives Form 1099, because these are reported to the IRS by employers and businesses.

Special Situations

U.S. citizens and resident aliens who are out of the country on the April filing deadline are automatically given two extra months (June 16, 2014) to file a return and pay any taxes due without incurring the late-filing or late-payment penalty.

Talk to a Tax Pro

The best step you can take if you’re still worried or uncertain of your tax obligations is to visit a CPA or Enrolled Agent (EA). They are tax professionals who are authorized to represent you before the IRS. And this time of year, they are also a form of tax therapist, and can put your mind at ease by ensuring you file your taxes properly.