How to File a Late Tax Return

How to File a Late Tax Return

By Janet Berry-Johnson, CPA

Facing down the April 15th deadline with an incomplete income tax return is stressful. But don’t let that looming deadline tempt you to rush through your return, making easily avoidable errors that end up costing you more in the long run. There’s an easy way to get more time.

A tax extension allows you to file days, weeks, or even months after the deadline. Here’s what you need to know about filing a late federal tax return.

What is a tax extension?

Traditionally, Form 1040, the federal income tax form for an individual, is due on April 15th, or the following business day if the 15th falls on a weekend or holiday. If you need more time, the IRS grants an automatic extension, as long as you file Form 4868 by that date. Filing an extension gives you an additional six months to prepare your tax forms and return, no matter the reason you need extra time.

One important thing to note is that filing an extension gives you extra time to complete your paperwork – it doesn’t give you more time to pay.

If you owe money with your return, you’re still required to pay by the April 15th deadline, or you could face more than one fee. You’ll need to estimate the amount you’ll owe based on your income and specific tax situation and make your payment by that date. A late payment could result in other penalties.

How to request a tax extension

If you need more time for filing taxes, there are a few ways to file an extension. Keep in mind these extensions won't let you delay payment of taxes, just filing your federal income tax return.

1 - File by mail

You can simply print Form 4868 and mail it to the IRS along with a check for the balance due. Page 4 of the form includes mailing addresses for paper filing Form 4868, depending on the state in which you live.

If you request an extension by mail, be sure to postmark your envelope by the due date. It’s also a good idea to send it via certified mail, with a return receipt. If you send it USPS First Class mail and the IRS receives it late, the IRS may charge you penalties and interest.

2 - File electronically

If you use tax preparation software, you can file your extension electronically using the software. If you need to make a payment with your extension, you can pay by electronic funds withdrawal through the software, or mail a check to the same address used for mailing Form 4868.

3 - IRS Direct Pay

If you pay the amount you owe using IRS Direct Pay, you don’t need to file a separate Form 4868. Simply choose “Extension” as your reason for payment and select the tax year to which your payment applies. The IRS will automatically process an extension on your behalf.

Just keep in mind that the April 15th deadline still applies. Also, IRS Direct Pay is only available Monday through Saturday from midnight to 11:45 p.m. Eastern and Sunday from 7 a.m. to 11:45 p.m. Eastern, and other outages of the system may occur. So don’t wait until the last minute, or you might not get your payment in on time.

What are the penalties for paying taxes late?

Sometimes, people miss the deadline to file an extension. Or can’t pay the amount they owe by April 15th. There are three types of fee penalties the IRS can apply as well as charge you interest on the balance.

Here’s what you need to know about IRS penalties and interest.

Failure to file penalty

If you don’t file your tax return (or an extension) by the April 15th deadline, the IRS will charge a failure to file penalty. The failure to file penalty is 5% of the unpaid tax.

The IRS will charge a failure to file penalty each month or part of a month that your return is late, up to five months. However, in each month that both the failure to file and failure to pay penalties apply, the failure to file penalty will be reduced by the failure to pay penalty. If you file more than 60 days after the due date, the minimum penalty is 100% of the tax due or $330, whichever is less.

Failure to pay penalty

If you don’t pay the tax you owe by April 15th, the IRS will charge a failure to pay penalty of 0.5% of the tax not paid. The IRS will charge the failure to pay penalty each month or part of a month following the due date until you’ve fully paid the amount owed or the penalty reaches 25% of the balance due.

Failure to pay proper estimated tax obligations

The U.S. has a “pay as you go” tax system, so you’re required to pay taxes throughout the year as you earn or receive taxable income.

If you don’t pay enough taxes for the year through withholding or estimated quarterly payments, the IRS may charge a failure to pay proper estimated tax penalty. You can calculate your failure to pay proper estimated tax penalty using Form 2210.

Interest

The IRS charges interest on any unpaid tax from the due date of the return until it receives payment in full. Interest rates are set quarterly. For the first quarter of 2020, the interest rate on underpayments is 5%.

If you’re ready to file your return but can’t afford to pay the balance due, file anyway and pay as much as you can. Filing late will just increase your potential penalties. You can always request a payment plan to pay the balance due over time.

Where to find help filing a late tax return

If you need help filing a late tax return or want to avoid filing late this year, there are several no-cost filing options, depending on your income level.

IRS Free File Software

If your income is below $69,000, you can file for free through the IRS’s Free File program. IRS Free File is a partnership between the IRS and several private tax preparation companies that agree to provide their software free of charge to certain taxpayers.

Visit IRS.gov/freefile to select a software provider and get started. Note that IRS Free File is only available from mid-January through mid-October. If you’re looking for help outside of that window, your options may be limited.

IRS Free Fillable Forms

If you don’t meet the income requirements to qualify for IRS Free File, you can still file for free using the IRS’ free Fillable Forms. While there are no age, income, or residency restrictions for using the Fillable Forms, it does require users to complete a paper return using only the form and form instructions as a guide. If you have a complicated tax situation or need professional help preparing your return, this isn’t a good option.

Volunteer Income Tax Assistance Program (VITA) and Tax Counseling for the Elderly (TCE)

The VITA and TCE programs offer free tax preparation help for people who make $56,000 or less, people with disabilities, people who speak limited English, and taxpayers age 60 or older.

VITA and TCE centers are usually located at community or neighborhood centers, libraries, schools, and other convenient locations. They’re staffed with certified volunteers who can provide basic income tax preparation with electronic filing.

You can find a VITA or TCE center near you by using the VITA/TCE Locator Tool. Most sites are only open from February through April, so if you are looking for help outside of these months, your options may be limited.

If you’ve delayed filing your tax return because you’re missing necessary forms, you may be able to find the information you need by requesting a Wage and Income Transcript from the IRS. This transcript reports all of the W-2s, 1099s, and other tax documents that were sent to the IRS on your behalf. You can also order an Account Transcript to see whether any estimated payments or other credits are on your account for that tax year. You can order these transcripts by signing up for an account at IRS.gov.

Bottom line

While the penalties for filing your tax return late may be steep, you have options. Get help from one of the free resources listed above, use online tax preparation software, or work with an experienced tax professional to file your tax return as soon as possible.

A tax extension can give you some breathing room if you need more time. Just make sure you pay what you owe by April 15th to avoid penalties and interest that can leave you worse off than you were before.

About the author

Janet Berry-Johnson is a Certified Public Accountant and freelance writer with a background in accounting and insurance. Her writing has appeared in Forbes, Freshbooks, The Penny Hoarder, and several other major outlets.

Written on January 23, 2020

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Disclaimer: Self is not providing financial advice. The content presented does not reflect the view of the Issuing Banks and is presented for general education and informational purposes only. Please consult with a qualified professional for financial advice.

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