One of life’s inevitabilities, taxes come as readily as breathing. However, because we are just human, the most of us have at some point delayed paying our taxes until the very last minute.
In light of the ongoing tax season, April 15, 2025, has been designated as IRS Tax Day. Anyone who is unprepared for the impending deadline may start to sweat.
However, if you file your tax returns after the designated due date, what are the possible consequences? Are the repercussions really that bad?
What occurs if you attempt to steer the entire tax system in the wrong direction?
When it comes to filing taxes, there is no statute of limitations. The IRS has the authority to take further action even though it typically does not pursue people with unfiled tax returns that are six years or older.
This is common when the taxpayer has engaged in persistent non-compliance. States have different tax laws.
For postal returns, a postmarked date on the envelope will serve as a straightforward indicator of the date of mailing.
In some cases, this can serve as a clear indication of the filing date of tax returns.
The IRS may be able to file your tax return on your behalf under certain circumstances. When they have access to a person’s W-2 form, this typically occurs.
At the end of each year, the employer typically completes and sends the wage and tax statement to the employee.
With these “substitute returns,” the individual will receive a Notice of Deficiency along with a proposed tax assessment based on information gleaned from the W2.
Despite its advantages, it prevents you from taking use of regular exemptions and deductions.
When uncertainty looms and the deadline is behind you
Upon realising that the deadline has past, one may question if tax filing should be completely postponed until the following fiscal year. However, it’s better to be late than never.
Here, time is of the essence; a few days late submission is preferable than a few weeks, so don’t put it off any longer.
The repercussions will depend on whether the person receives a refund or if money is owing to the IRS.
When tax returns are filed beyond the deadline, refunds are just postponed; they do not disappear. Up to three years following the original filing deadline, refunds can still be claimed.
After that, all will be lost. Late submission penalties mount up each month.
The entire amount payable to the IRS is then subject to an extra 5% IRS failure to file penalty. According to the IRS, a delay of one to thirty days is considered a month.
All past-due taxes are subject to the failure to pay penalty
All unpaid past-due taxes are subject to the failure to pay penalty. Up to 25% of the entire amount owed to the IRS, or 0.5 percent of the monthly total amount owed, may be issued.
Penalties from both sides may result from failing to file and pay your past-due taxes.
In certain situations, the IRS usually lowers the total penalty for both failing to file and failing to pay the penalty.
When broken down, this could indicate that you owe 4.5% rather than 5% if you are one month delayed on your filing. Then, there would be a 0.5% penalty for nonpayment.
The fact that interest will also be imposed at the 7% annual interest rate is just fueling the flames. It is not advisable to overlook the issue when faced with financial difficulties.
Instead, work out a payment plan with the IRS and pay what you can afford at the time. Ignoring tax issues is never a smart choice.
Source: eldiario24
