Oops, I Forgot to File!

Though April 15 is a day of dread and not easily forgotten by many taxpayers, there are still those who miss the tax filing deadline. If you know you’ll be late with your tax return, you can file for an extension which, if granted, moves the due date to October (for example, October 16 in 2017). For those who wake up April 16 or later with a sense of dread, here’s what you can expect.

You’re Receiving a Tax Refund

If you’re like approximately 80% of all taxpayers, you’ll receive some level of tax refund. Don’t worry, you don’t forfeit your claim on that refund by missing the tax deadline, at least not immediately. There’s no penalty assessed for late filing when you’re due to receive a refund. You can file and claim your refund up to three years after the due date for that tax year. After the three year mark, however, unclaimed refunds belong to the U.S. Treasury.

You Have a Tax Amount Owing

This is a bit more serious. The tax deadline is a hard deadline if you owe additional amounts in taxes. There are two penalties that apply when a taxpayer owes an amount and files late. Let’s look at the permutations:

  • There is no penalty if you file an extension as long as you submit your return by the extension deadline and you pay any additional tax owing by the April 15 deadline. That’s right. Even if you don’t file until October, you must pay the amount owing by April 15. (or the alternate tax deadline if the 15th falls on a weekend)
  • Late Filing Penalties: These occur if:
    • you owe taxes and do not file by April 15,
    • if you owe taxes, file for an extension and miss the October deadline

The late filing penalty is 5% of the additional taxes owed, for each month or part month for which the taxes remain unpaid, to a maximum of 25%. Filing more than 60 days after the deadline carries a minimum penalty of $135 or 100% of the unpaid tax, whichever is smaller. The late filing penalty may be as much as 10 times the late payment penalty, so you’re better off to file and not pay than vice versa.

  • Late Payment Penalties: These apply whenever you owe additional taxes and these are not paid by the April deadline. It doesn’t matter if you filed for an extension or not. The late payment penalty is only 0.5% on the unpaid amount, for each month or part month for which it is unpaid. A maximum of 25% also applies. For months when both penalties apply, the 0.5% amount is waived.

About Paul Gaulkin

Paul Gaulkin is enrolled with the US Treasury to practice before the IRS. Mr. Gaulkin possesses technical knowledge in the process of securing relief for taxpayers in need of tax help. With an accounting degree from Florida International University, he is able to transform complex tax and accounting problems into easy to understand solutions.

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