So, you missed Tax Day. It happens.
Don't panic. But don't dawdle. The Internal Revenue Service is serious about wanting your tax forms and, of course, any taxes you owe.
Below are four things you need to do now to get out of that penalty jam with as little damage as possible.
Plus, there's a fifth tax move that could pay off for folks who aren't legally required to file a return.
1. File something.
Even though Uncle Sam started calculating penalties and interest charges on your unpaid tax bill as soon as the calendar flipped to April 19, you can stop the late-filing charges by submitting a return. Even if your Form 1040 has errors, it's better to get something in to the IRS and then correct your mistakes by filing an amended return.
Plus, getting your slightly overdue return 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 $73,000 or less.
2. Pay what you can.
Many people put off filing, even after Tax Day, because they owe. Not a good move. The previously mentioned penalties and interest just add to your tax debt in the form of accruing interest and late-payment charges. Yes, they are separate from late-filing penalties.
If you didn't file because you couldn't pay your full 2020 tax bill, pay what you can. Again, as soon as possible. Like now. Any amount will help reduce the associated penalties and interest.
Going electronic here also is the quickest and easiest way to pay your taxes. You can use one of the IRS-approved e-payment options mentioned in my ways to pay taxes overview post. You also can check out IRS.gov's Pay Online page.
3. Set up a payment plan.
OK, your tax bill is big. Really big. The IRS offers some ways to deal with a tax balance that's just too darn big to pay in one fell swoop.
Under a short-term IRS payment plan, you get 180 days to remit your tax debt that's less than $100,000 in combined tax, penalties and interest. The nice thing about paying off your tax bill quickly is that the IRS doesn't charge a set-up fee.
If you need more than six months to pay, the IRS offers a long-term payment installment agreement. Payments under these arrangements 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. Depending on which you choose (or qualify for) and how you apply, the fees to establish a long-term tax payment plan range from $31 to $225.
You can get details on IRS payment plans at the agency's application and frequently asked questions page.
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' Emancipation Day delayed April 18 deadline, or April 19 for Patriots Day celebrants in Maine and Massachusetts.
Chances are that if you missed getting your tax return to Uncle Sam this week, 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, what the heck are you waiting for?!? The IRS isn't going to automatically send you your tax payment overage. You have to send in a 1040 to get it.
Plus, this filing season, families who don't owe federal taxes still should file a 2021 tax return to claim the Child Tax Credit, which is more appealing this year due to tax law changes as part of COVID-19 pandemic relief efforts.
Eligibility for the Child Tax Credit has been expanded, making more families eligible. For example, this year is the first time that many families with children in Puerto Rico will be able to to claim this popular tax credit, which is refundable, meaning you get the money you're due even if you don't owe the U.S. Treasury.
And this filing season (and for 2021 returns only … so far), the Child Tax Credit dollar amount is increased to up to $3,600 per qualifying child. You definitely don't want to let this bonus tax break go to waste.
There also are other, non-coronavirus related 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 — shameless plug: the ol' blog's monthly filing tips can help — 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.