As you may already know, the IRS offers tax extensions to both individuals and businesses to allow you more time to file your taxes. At The Jones CPA Group, we can file an extension for your personal or business tax return on your behalf. Though this is a great way to get a little breathing room so you can finish gathering your paperwork, it is not something that should be taken lightly; once the extension deadline rolls around, you can be facing serious penalties and fines for filing late.
Here’s what you need to know about tax extensions, deadlines, and the late-filing fees you can face if you don’t file before the extension deadline.
If you need an extension on your personal tax return, you can extend your deadline from April 15th to October 15th. However, even if you are planning to extend, you can still be hit with late payment penalties for not making a tax payment by the tax deadline. To avoid these penalties, you should make an estimate of what you will likely owe and send in that payment amount by April 15th.
It is important that you follow this process to avoid both the failure-to-file and failure-to-pay penalties. The fee for filing late is typically 5% of the unpaid taxes for every month or portion of a month that the tax return is late. The failure-to-pay penalty is normally 0.5% of your owed taxes for each month or part of a month that the amount is unpaid; these fees will accrue until you reach 25% of your unpaid taxes.
If you file more than 60 days after the due date—or your extended due date—the minimum penalty will be 100% of your unpaid tax or $135, whichever is smaller. If you have already extended your tax deadline and want to avoid any late-filing penalties, make sure to get your documents in order and turned in to your CPA as soon as possible.
Businesses such as S-Corporations and LLCs with multiple members can also have their tax deadlines extended. The initial business tax deadline is March 15th for corporations and April 15th for LLCs, but these can be extended to September 15th. If you have gotten an extension for your business’s tax deadline, the extension deadline is only a week away, so you need to get your documents handed over to your CPA right away!
The penalties for filing late as a partnership or S-Corporation can add up quickly. The penalty is $195 per shareholder for every month or portion of a month that you are late. For example, if there are three owners and you don’t get your taxes in until October 2nd, you must pay the penalty for two months—September and October. That comes to $1,170 owed.
Nobody wants to be hit with those kinds of fees. If you want to avoid them, contact us at The Jones CPA Group and send us your documents as soon as possible. As long as we receive all of the information we need, we can get your taxes filed on time so that you can avoid paying any penalties.