We had a great tax season here at The Jones CPA Group, and had the added pleasure of working with many new clients as well as a number of returning clients. For many of these individuals and businesses, getting all of the necessary forms together in time for the filing deadline was a high-stress endeavor. To take some of the strain off, many of them filed for a tax extension, giving them more time to prepare their tax documents.
As we’ve mentioned in previous posts, if you have extended, the deadlines for filing are September 15th for businesses and October 15th for individuals. While these extra 6 months give you some breathing room, it’s important that you not delay your filing any longer than is absolutely necessary. Missing these deadlines can result in high penalties. Here’s what you need to know about payment penalties and how they apply to you if you miss the extension deadline.
Even if you’ve filed a tax extension, you should have made an estimated payment to the IRS if you are expecting to owe any amount this year. If you didn’t do this, when you do file your taxes (even if you file prior to the extension deadline) you will be hit with a late payment penalty. This penalty is generally 0.5% of the amount you owe for each month after the tax deadline. These penalties begin to accrue on April 19th and will continue to add up until you pay the amount due or until the penalty totals 25% of your owed taxes, whichever comes first.
If you filed for an extension and are expecting to owe on your taxes this year, and you didn’t submit a payment, it’s not too late. Our experienced CPAs can help you estimate how much you will owe and get a payment submitted so that you don’t accrue any more penalties. As long as you pay 90% of the amount you end up owing at the time of filing, the IRS may not hit you with any more late payment penalties, so we can help ensure that your estimated payment is as accurate as possible.
Perhaps you have filed for an extension, but are worried that you will be unable to pay the amount you owe when you submit your final tax filing. This is an understandable concern, but we strongly encourage you to file your tax returns in spite of this. In most cases, the penalty for not filing is 10 times higher than the penalty for not paying, so you definitely want to get your return submitted on time.
If you are unable to find any means of paying the taxes you owe (loans, credit card payment, etc.), the IRS is typically willing to set up a payment plan to help you pay off your tax debt in a reasonable amount of time, and in increments that are manageable for you. You can set up a payment plan here if you need to, or one of our accountants can help you do so when filing your taxes.
If you forgot to file for an extension before April 18th, unfortunately, you can’t file for one now. You simply need to file your taxes and submit any necessary payment as soon as possible. Remember that penalties are accrued on a monthly basis. This is 5% per month if the late filing and late payment penalties apply, up to 25% of your total taxes owed. So the sooner you file, the fewer penalties you will have to pay.
Whether you need to file your taxes immediately, or need to prepare for the extension deadline, contact The Jones CPA Group to schedule an appointment. We’ll help you complete your tax return so you can minimize or avoid those late payment penalties.