What To Do If You Missed The Tax Return Deadline

Life gets busy and it can be easy to overlook important deadlines. When it comes to filing your tax return, it’s not the end of the world if you are late. There are steps you can take to correct the situation and minimize any potential penalties or interest. In this article, we’ll walk through what to do if you missed the tax return deadline. This is a guide for individuals and small business owners to help navigate the process smoothly and avoid unnecessary stress.

1. File Your Return ASAP

The most important step is to file your return as soon as possible. The IRS prefers that you file your return, even if it’s late, rather than risk penalties for not filing at all.

Here’s why: The IRS imposes a penalty for late filing, which can be much higher than the penalty for late payment. However, the penalty for not filing a return at all can be much more severe. The sooner you file, the better your chances are of minimizing both the filing and payment penalties.

Late Payment Penalty: The IRS typically charges a late payment penalty of 0.5% per month on the taxes you owe. This can add up quickly so it’s best to pay what you can right away, even if it’s not the full balance.

2. Pay Any Taxes Owed

When you file your return late, you might have to pay additional penalties and interest, especially if you owe taxes. Even if you can’t pay the full amount owed, it is critical to pay as much as you can to reduce the amount of penalties and interests that will accumulate.

Interest: In addition to penalties, interest on the unpaid balance will accrue from the due date of the taxes until they are paid in full. Interest rates are generally set quarterly by the IRS.

If you’re unable to pay in full, there are options for small business owners and individuals to set up payment plans or installment agreements with the IRS. These plans allow you to make smaller monthly payments until your debt it settled.

3. Request an Extension (If Possible)

If you realize that you’ve missed the deadline but are still within a certain timeframe, it might be worth considering whether you can file for an extension. In most cases, the IRS allows taxpayers to request an extension to file their return, giving you an additional six months to submit your paperwork. Keep in mind that this does not extend the payment deadline and it will not affect how much you owe or receive.

If you owe taxes, they still must be paid by the original due date to avoid the penalties for late payment. Therefore, if you expect to owe, it’s better to pay the estimated amount by the deadline and file the extension for paperwork completion. Extensions can be filed online through the IRS website or by mailing in Form 4898.

4. Understand the Penalties You May Face

If you miss the tax deadline, it’s important to understand the possible penalties you may face. The two primary types of penalties are for late filing and late payment.

Late Filing Penalty: If you file your tax return more than 60 days after the due date, the IRS may charge a late filing penalty of 5% of the unpaid tax for each month your return is late, up to a maximum of 25%. If you owe taxes and are late, this penalty can quickly add up.

Late Payment Penalty: The IRS charges a penalty of 0.5% per month on the unpaid taxes. It will continue to accrue until the balance is paid in full. You can avoid the late payment penalty if you show “reasonable cause” for the late payment.

Interest: Interest will accrue on any unpaid taxes, compounded daily, until your balance is paid in full.

For more information on penalties, visit the IRS website here.

5. Consider Applying for Penalty Relief

In some cases, you might be eligible for penalty relief if you have a good reason for missing the deadline. For example, if you were affected by a natural disaster, illness, or other serious issues, the IRS may waive or reduce your penalties. Business owners may be able to make a case for penalty relief due to unforeseen disruptions in their operations.

To apply: If qualified, you can request it when you file your tax return or by calling the IRS directly.

6. Small Business Owners: Don’t Forget About Your Business Taxes

As a business owner, you may have different filing requirements compared to individual taxpayers. Missing the deadline for business taxes can lead to additional complications, such as:

Self-Employment Tax: If you’re a sole proprietor, you’ll need to pay self-employment taxes on your income, which covers Social Security and Medicare contributions.

Quarterly Estimated Taxes: Small business owners are generally required to pay estimated taxes on a quarterly basis. If you miss a quarterly payment, you may face penalties for late payment. However, if you didn’t owe taxes for a given quarter, there might not be an penalties.

Other Business Deductions: By missing the deadline, you might lose out on valuable business deductions. Filing late may also delay any refunds you are due or may effect the timing of deductions related to your business expenses.

7. What If You Already Filed but Made a Mistake?

If you filed your return but later realized that you made a mistake, don’t panic! You can amend your tax return using Form 1040-X (or its equivalent in your country). This form lets you correct errors such as:

Reporting the wrong income
Claiming incorrect deductions or credits
Adjusting filing status

If the amendment results in a larger refund, you will generally receive it after the form is processed.

If the amendment increases the taxes owed, be sure to pay the additional taxes as soon as possible to avoid more penalties and interests.

8. Seek Professional Help

If you find the process confusing or are unsure of how to handle your specific situation, it may be a good ideas to consult with a tax professional. A certified public accountant (CPA) or tax advisor can guide you through the process, helping minimize penalties and ensure that you file correctly. Our firm, RA Tax and Accounting, Inc. is always accepting new clients. For more information about our services, you can visit our Services page on our website.

Conclusion

Missing a tax return deadline is a common issue, but it doesn’t have to be a disaster. The most important thing to do is file your return and pay any taxes owed as soon as possible. By understanding the potential penalties, seeking an extension if necessary, and considering your options for penalty relief, you can lower the impact of a missed deadline.

Whether you’re a regular taxpayer or a business owner, being proactive, organized, and staying on top of your filing obligations will help you avoid issues in the future. Don’t let one missed deadline snowball into bigger problems. Take actions, stay informed, and get the help you need to move forward confidently.