P.S. — The IRS commish says thanks to those who did file on May 17.
Wow. Those extra 32 days to get your taxes done sure went fast. So quickly, in fact, that you flat-out missed the May 17 tax filing deadline.
Don't panic, but don't procrastinate any longer.
The Internal Revenue Service is serious about wanting your tax forms and, of course, any taxes you owe. If you miss the annual deadline, regardless of exactly when it falls, then you'll likely end up facing three main filing-related penalties, the harshest of which is for not filing at all.
Below are four things you need to do now to get out of that penalty jam with as little damage as possible.
Plus, you'll find a fifth move for folks who aren't required to file.
And for all y'all who did complete your tax obligations on time, there's a thank you from the IRS commissioner.
1. File something.
Yes, the filing deadline is over. But getting your Form 1040 to the IRS as soon as you can will stop the charges for being late. Even if your return has errors, it's better to get something in to the IRS and then correct your mistakes by filing an amended return.
Why the hurry? Did you just glide past my already multiple references to penalties and interest? Those meters started running when the clock clicked over to 12:01 a.m. your local time on May 18.
The only way to turn off that timer and stop charges from accruing is to get the IRS some official paperwork (and payment). Now.
Plus, getting your 1040 form into the system will prove to the IRS that you know you have a tax responsibility and you're doing your best to fulfill it. The quickest way to do this is to e-file. You can still use Free File if your adjusted gross income, regardless of your filing status, is $72,000 or less.
If you're just finishing up your 2020 return, check out these 10 tax tips for last-minute 2020 return filers.
2. Pay what you can.
You probably noticed the parenthetical mention of tax payments in post-Tax Day move #1. That's because there are separate IRS charges for late or not filing forms and late and not paying taxes.
Just like with the charges for late 1040s and other associated forms, interest and penalties started adding up on any unpaid tax, too, as soon as the calendar page flipped to May 18.
If you didn't file because you couldn't pay your full 2020 tax bill, pay what you can. Again, now. Any amount will help reduce the associated penalties and interest.
3. Set up a payment plan.
OK, your tax bill is big. Really big. In this case, you should look into paying it off over time. The IRS offers a couple of types of online payment plans, a short-term version and long-term option.
You also have two choices within the short-term category. One lets you pay your full tax debt in 120 days or less, as long as the amount you owe is less than $100,000 in combined tax, penalties and interest. The other is a 180-day short-term payment option, but obtaining it is a bit more involved. Whichever short-term payment option applies, there's no set-up fee. However, interest and the late-payment penalty charges continue to apply.
Most folks opt for more time to pay their tax bills with a long-term payment plan, which also is known as an installment agreement. Payments under this arrangement are made monthly. To get a long-term tax payment deal, any tax you owe plus penalties and interest must be less than $50,000. There also is, in most cases, a fee for a long-term payment plan.
4. File your state returns, too.
Most states and the District of Columbia collect some form of income taxes from their residents. And most of them this filing season went along with the IRS delayed May 17 deadline.
Chances are that if you missed getting your tax return to Uncle Sam yesterday, you also missed your state's tax deadline, since most states' tax systems use taxpayers' federal returns as the starting point for figuring the more-local taxes due.
Each state has its own rules and penalties for late- and non-filers, but they all share one thing. State tax offices, like the IRS, also charge for late filing. So the longer you put off your state tax filing, the more you'll owe your state tax collector.
Check with your state tax department about the steps you need to take here to reduce those penalties.
5. File even if you don't owe.
What if you don't owe any tax? You might want to touch base with the IRS and your state tax officials anyway.
Sure, you won't owe any penalties if you don't owe any taxes since, in most cases, the added charges are calculated on the amount of unpaid tax.
But the odds of getting to a zero tax bill at filing time, either through the payroll withholding throughout the year and/or by any estimated tax payments you made, are greater than hitting a Las Vegas jackpot, which by the way, also is taxable income.
So it's likely that you owe at least a little. If you put off filing the return that shows that bill and paying it, that small tax bill could grow to a surprising level.
And if you're due a refund, or a COVID-19 economic relief payment based on your 2020 earnings, then why the heck are you waiting to file?! The IRS is not going to automatically send the money to you without some information. You have to submit a 1040 showing how you overpaid last year, then the IRS will issue your refund.
Plus, there are other reasons to file a tax return when you don't legally have to do so.
So regardless of whether you owe or are getting a refund, the bottom line is the same. Finish that federal return and get it to the IRS and, depending on where you live, your state filing, too, as quickly as you can.
With taxes, late truly is better than never.
Thanks for the filings: Finally, for all who did meet the May 17 deadline, the IRS Commissioner says thanks. Really. (I hope comedian/actress Tiffany Haddish saw the column.)
In a column for the IRS' Closer Look online feature, Commissioner Charles Rettig let us know that the "IRS appreciates the time and personal effort each and every taxpayer takes to file and pay their taxes."
"You may not realize it, but you play a vital role in our tax system simply by filing your tax return," added Rettig. "When you perform your civic duty each year by preparing and filing your taxes, and paying what you should, you help fund critical aspects of the United States, ranging from schools and roads to Social Security payments and the nation’s military. In fact, through this annual process, approximately 96% of the gross receipts of our country flows through the IRS."
Now if the head tax honcho's thanks and those fiscal tidbits don't prompt all you slow filers to get the job done, I don't know what will. 😉
Revised 5/18/21 to remove filing extension references
You also might find these items of interest:
- 12 common tax-filing errors
- 12 often overlooked tax breaks
- Tax Tips to help file your 2020 return: January, February, March, April, and May