Michelle Ezell EA LTC

Grants Pass, OR

What to Do if You Missed the Tax Filing Deadline

August 4, 2024

Missing the April deadline to file your 2023 federal income tax return can be stressful, but the IRS provides several options to help you get back on track. At Grants Pass Tax Service, we are committed to helping you navigate these options and minimize penalties and interest.

File and Pay What You Can to Reduce Penalties and Interest 

The IRS emphasizes the importance of filing your tax return and paying any taxes you owe as soon as possible, as penalties and interest can accumulate quickly: 

  • Late-Filing Penalty: Generally 5% per month of the unpaid taxes, up to a maximum of 25%. 
  • Late-Payment Penalty: Usually 0.5% per month of the unpaid taxes, up to 25%. 
  • Interest on Unpaid Taxes: Currently 8%, compounded daily. 

 

If you file more than 60 days after the due date, the minimum penalty is either $485 or 100% of the unpaid tax, whichever is less. To limit these charges, the fastest and easiest way to pay is through IRS Direct Pay on IRS.gov. 

 

Payment Options for Those Unable to Pay in Full 

If you cannot pay your entire tax bill immediately, the IRS offers several payment plans: 

  • Short-Term Payment Plan: Available if you owe less than $100,000 in combined tax, penalties, and interest. You get up to 180 days to pay the balance in full. 
  • Long-Term Payment Plan: Available if you owe less than $50,000 in combined tax, penalties, and interest. You can make monthly payments for up to 72 months. For balances between $25,000 and $50,000, direct debit is required. 
     

Setting up a payment plan online is straightforward, and you’ll receive an immediate response. Note that while penalties and interest continue to accrue on unpaid taxes, the failure-to-pay penalty is reduced by half while an installment agreement is in effect. 

 

Penalty Relief Options 

If you receive a penalty notice from the IRS, review it carefully to see if you qualify for relief: 

  • First-Time Penalty Abatement: Available to taxpayers who have filed and paid on time and have not been assessed penalties in the past three years. 
  • Reasonable Cause Relief: If your failure to file or pay on time was due to reasonable cause and not willful neglect, you may qualify for this relief. 

 

While penalty relief can be granted, interest on unpaid taxes continues to accrue until the balance is paid in full. For more details, visit the Penalty Relief section on IRS.gov. 

 

Automatic Extensions for Certain Taxpayers 

Some taxpayers automatically qualify for additional time to file and pay taxes without penalties: 

  • Disaster Area Taxpayers: Those in federally declared disaster areas automatically receive extensions. 

  • Expats and Military Personnel: U.S. citizens and resident aliens living abroad, as well as members of the military on duty outside the U.S. and those serving in combat zones, are granted extra time. 

 

Adjust Your Withholding to Avoid Future Issues 

To avoid unexpected tax bills or penalties in the future, it's essential to ensure the correct amount of tax is withheld from your paycheck throughout the year. While the IRS provides tools like the Tax Withholding Estimator, we understand that these tools might not work perfectly for everyone. 

 

This is where professional guidance can make a significant difference. Working with a tax professional can provide you with personalized tax planning strategies tailored to your unique financial situation.  

  • Review Your Current Withholding: We’ll analyze your current withholding and identify any necessary adjustments to ensure you’re paying the right amount of tax. 
  • Maximize Tax Efficiency: We’ll help you take advantage of all available tax credits and deductions to minimize your tax liability. 

  • Plan for Major Life Changes: Whether you’re getting married, having a child, or buying a home, we can help you adjust your withholding and tax strategy to reflect these changes. 

 

By working with a tax professional, you can avoid the pitfalls of under-withholding and ensure that you’re well-prepared for tax season. Contact us today to schedule a consultation and take the first step towards effective tax planning, catching up on unfiled returns, and achieving peace of mind.

Image by Pierre Bamin