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Missed the tax deadline? Here’s what you should do

If you didn’t file your tax return but were required to do so, take action before it’s too late.

If you owe taxes, not filing can result in penalties and late charges. If you are owed a refund, you can leave money on the table without even realizing it.

You might think it is overwhelming and difficult to catch up but that’s really not the case. The worst thing you can do is not do anything.

Here’s what you should do if you missed the tax deadline:

File now and make a payment (if due)

If you are getting a refund, please make sure to file your tax return as soon as possible. It’s not too late and there are many free tax preparation services that will still allow you to file your income tax return. IRS doesn’t charge a penalty for filing a late return if you are due a refund. Do it now, IRS is sending refunds in 1-week.

If you owe taxes, you should file and pay as soon as possible. This will stop the IRS from charging you interest and penalties. Use IRS Direct Pay to make pay taxes due for free if you are paying from your checking account. If you are using a credit card, there’s a small transaction fee charged by the 3rd party.

Check if you can file your taxes online for free.

Penalties and late charges

If you are due a refund there is no penalty if you file a late tax return. If you owe tax, and you failed to file and pay on time, you will most likely owe interest and penalties on the tax you pay late. To keep interest and penalties to a minimum, you should file your tax return and pay the tax as soon as possible. Here are some facts that you should know.

  • Two penalties may apply. One penalty is for filing late and one is for paying late. They can add up fast. Interest accrues on top of the penalties.
  • The penalty for late filing. If you file your 2015 tax return more than 60 days after the due date or extended due date, the minimum penalty is $205 or, if you owe less than $205, 100 percent of the unpaid tax. Otherwise, the penalty can be as much as 5% of your unpaid taxes each month up to a maximum of 25%.
  • The penalty for late payment. The penalty is generally 0.5% of your unpaid taxes per month. It can build up to as much as 25% of your unpaid taxes.
  • Combined penalty per month. If both the late filing and late payment penalties apply, the maximum amount charged for the two penalties is 5% per month.

Sign-up for the installment agreement

Filing your taxes is not enough if you owe taxes. The payment needs to be made the same day as the return is filed unless you sign-up to make monthly payments using an installment agreement. Even if you are filing an extension, the payment is due with the extension if you owe taxes. An extension only allows you time to file, not to pay.

Source: IRS