So, you’ve missed the first deadline for taxes. Luckily, this is usually a fixable situation. Filing for your income tax return late is a more common practice than you’d think. Many investors don’t receive their K-1s (statements of income from partnerships) until after tax season, so a portion of taxpayers are accustomed to paying late. However, there are some do’s & don’ts to keep in mind while filing taxes late.
You Will Have to Pay Extra
Requesting an extension is simple enough. IRS Form 4868 allows for an extension if you submit it before the deadline. If you’ve done this – great! You now have a couple of months to submit your income tax return before the final deadline. Keep in mind though, this isn’t giving you more time to pay your taxes, it’s giving you more time to file them. When filling out an extension, you’ll still be paying a rough estimate of what you think you owe. It’s important to round this amount of money up, along with potential interest, and submit it along with the tax extension form.
When paying late taxes, it can be a good strategy to pay more than you think you owe. Conversely, if the money ends up falling short of what you owe – you’ll have to pay interest on top of the regular amount, plus a tax for every additional month it takes for you to pay the full amount. Even with an extension, you will have to pay a late fee of 5% for every month until the full balance is paid off. Make sure to stay on top of it: this tax can raise up to 25% after the final deadline.
Remember the Deadline
The most important part about filing late taxes is to keep in mind that the sum must be paid before the upcoming deadline. Late taxes are not uncommon, but an unpaid balance after the second deadline can cost you extra penalties, on top of the balance that you already owe.
The IRS will often give exceptions to people filing late if they fit in a particular category. These categories can include people who work or live overseas, those who have been suffering from natural disasters, and certain military service members. Sometimes in these scenarios you won’t need to file for an extension, it will be automatically given. However, it’s still important to stay on top of your tax returns to ensure your balance is paid off.
Still concerned about your tax return? At All About Businesses, we offer tax preparation services and consultation. Never stress about late taxes again. For any questions or concerns, reach out to our team and find a bookkeeper who can help you navigate the world of taxes.