What happens if I miss the tax deadline?
The US tax deadline, 18 April, is fast approaching. Extensions are available but what happens if a taxpayer does not submit their return on time?
Taxes in most states are due on 18 April, giving those in the US a little under a month to complete and submit their return. In both 2020 and 2021, the IRS offered a federal extension to the tax deadline because of the pandemic and associated stimulus bills which altered the tax code. Last year, the extension gave the IRS more time to adjust to changes to the tax code made through the American Rescue Plan. These changes led to many households receiving larger refunds last year. As no further stimulus packages have been passed, refunds, on average, will not be as large.
The IRS has offered some extensions to residents in places that have been victims of natural disasters.
What fees and penalties are applied if taxes go unpaid?
The amount applied in fees and penalties will depend on how late a taxpayer is in submitting their return or how long they have waited to pay the penalty. If you are given a penalty the IRS will "send you a notice or letter by mail [which] will tell you about the penalty, the reason for the charge and what to do next." Starting on 1 April, the IRS will charge four percent interest on underpayments.
How do I apply for an extension?
The IRS has offered some extensions to residents in places that have been victims of natural disasters. However, if you need more time for what ever reason you can apply for an extension through 17 October 2022. There are no penalties for this option, but you should make sure that you pay and state income tax you owe because the federal one may not apply.
To apply for your extension you will need to fill out and submit a 4868 form. Those who are interested in requesting an extension the IRS recommends that taxpayers “estimate and pay any owed taxes by your regular deadline to help avoid possible penalties.”