Tax season may be overwhelming for many Americans, but it doesn’t have to be. In this article, we will help get you up to speed on the basics of filing your taxes and help you understand why it’s important to finish this process sooner rather than later.
When is Tax Day?
Tax Day is officially on April 15th every year. However, when this date falls on a weekend, Tax Day is pushed back to the next business day.
To avoid any potential penalties from the IRS, you will need to file your taxes by this date.
While it is best not to procrastinate, it’s important to understand what would happen if you aren’t able to file your taxes on time.
Our Trending Credit Score Offers
What happens if you don’t file your taxes on time?
If you don’t submit your taxes by Tax Day, the IRS can fine you for every month that passes before you file. In most cases, the penalty for filing late is five percent of the taxes you owe.
However, that penalty can then stack up each month, eventually maxing out at 25% if you continue to drag out the process.
Instead of leaving things up to chance, it’s best to contact the IRS right away if you’re worried that you won’t be able to file your taxes on time. The IRS can be understanding when there is a situation that may make it difficult to file by the deadline. To help, the IRS has implemented a number of safeguards that can be used to avoid penalties should a difficulty arise.
The worst thing you can do is avoid filing your taxes altogether without asking the IRS for help. As a result, you could incur a huge fine, as well as being subjected to an intense and time-consuming IRS audit.
How can you avoid late filing penalties?
The best way to avoid penalties from the IRS is, of course, to file your taxes on time. However, it is possible to file for a tax extension if you know that you won’t be able to meet the Tax Day deadline.
To request an extension, you’ll need to file an IRS Form 4868, which can give you an extra six months to file your taxes. Doing this can help protect you from the penalties associated with late filings, and it can also preserve your ability to receive a tax refund if you’re eligible.
However, filing an IRS Form 4868 does not protect you from the interest that accrues on the taxes you owe but have not yet paid. You will still be charged 0.5 percent interest for every month that your filing is extended.
Play it safe, and file early
As daunting as it may seem to file your taxes, you may be able to relieve some of that stress by being proactive. If you’re getting closer to Tax Day, and you haven’t yet started the filing process, now may be the best time to gather up all of your materials to submit to the IRS. Unfortunately, there is no official reward for filing your taxes early, but the peace of mind you’ll experience once your filing is complete will provide the personal satisfaction you deserve.