I Missed the Tax Deadline, Now What?
Are you feeling lost and overwhelmed about the tax deadline?
Don’t worry, you’re not alone. In fact, you’re in the majority! The good news is that you have options, even if you missed the deadline.
The bad news? Well, the IRS is out to get you, and they will charge you interest and penalties if you don’t pay your taxes on time. But fear not, dear reader, for I am here to guide you through the muddy waters of taxes.
Let’s start with the basics:
the tax filing deadline for personal and C Corp returns was April 18th this year, and for S corporations and partnerships, it was March 15th. So if you missed the deadline, you’re not alone. But don’t panic! If you filed an extension and don’t owe any money, you’re fine. You have six months to file your taxes. However, if you filed an extension and owe money, the IRS will charge you penalties.
Here’s the deal:
the extension only extends the time to file your tax return, not the time to pay your taxes. The payment is always due on the filing deadline, which was April 18th this year. So if you owe money and didn’t pay it by the deadline, you’ll be hit with late payment penalties. And trust us, you don’t want that.
But wait, there’s more!
There are two penalties you want to avoid: the late filing penalty and the late payment penalty. If you file an extension on time, you’ll avoid the late filing penalty. However, if you owe money and didn’t pay it, there will be a late payment penalty. So, if you owe taxes, we recommend that you pay what you can. If you’re not sure what you owe, ask your accountant to run an estimate. It might cost you extra, but it’s better than paying the IRS’s interest and penalties.
Now, if you can’t afford to pay everything now, don’t worry.
You can pay as much as you can and spread the rest out over time. If you can pay it off within the next 12 months, pay off what you can when you can until it’s paid off. But if it’s going to take more than 12 months, consider an installment plan. This is where you can go to the IRS and say, “I owe this much money, and I need to spread it out over this many months, and this is what I can pay every month.” It’s a bit more involved, but it’s worth it to avoid the penalties.
Now, if you find that every year, you’re filing an extension and owing money but not paying it by April 18th, you need to consider implementing some things throughout the year to manage your cash.
A simple thing you can do is create a new bank account called “tax” and transfer money from your other account into it twice a month. This way, you’ll always have enough money to cover taxes come tax time.
Don’t let the IRS get you down.
You have options, and if you’re feeling lost, reach out to your accountant. They’re here to help you navigate the murky waters of taxes. And if you’re still feeling overwhelmed, just remember, you’re not alone.
We’re all in this together, whether we like it or not.
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