What To Do If You Didn't File Your Tax Return On Time
Tax Day was Monday, April 15, for most taxpayers (though taxpayers who live in Maine or Massachusetts have until April 17, 2019). Not every taxpayer who needed to file made it on time (I’m not counting those of you who filed for an extension since you’re still timely). What about you? Maybe your hard drive died, maybe you ate some bad fish, or maybe your dog ate your return. I’m not judging. The question isn’t so much “what happened?” but rather “what happens next?”
Here’s what to do next if you didn’t get your tax return filed on time:
Don’t panic. It won’t get you anywhere. Too many times, taxpayers completely freak out over a missed deadline and decide that there’s no point in filing now and decide to fix it later. Don’t be that taxpayer. Later might not come: Take a deep breath and fix it now.
Double-check whether you needed to file in the first place. You might be panicking for no reason. Not everyone needs to file a tax return every year. If your income or other circumstances mean that you don’t need to file, you’re in the clear. But be careful: Whether you need to file can change from year to year so don’t assume that you won’t need to file next year if you get a free pass this year.
File today. If you didn’t file on time, get your tax return together as soon as you can. If you are due a refund, there is no penalty for filing a late return after the tax deadline. But if you owe, penalties and interest are calculated based on the passage of time: that means the more time that goes by, the more you will owe. So don’t tuck your information away and vow to fix it next year (see again #1). Do it now in order to keep penalties low.
Use Free File. If you don’t know where to go to find forms or software, don’t use that as an excuse. For those taxpayers who qualify – and the Internal Revenue Service (IRS) estimates that about 70% of taxpayers qualify – Free File is available through October 15. Free File allows taxpayers to prepare and file returns electronically for free.
Pay attention to available extensions and relief. Taxpayers affected by natural disasters may have extra time with no extra paperwork to file. In particular, the IRS extended tax deadlines for affected individuals and businesses in parts of Alabama following the March storms. For more details, check the disaster relief page on the IRS website. Additionally, some other taxpayers are automatically entitled to extra time, including those who are out of the country or on active duty in the military.
File even if you can’t pay. A lot of taxpayers figure that if they can’t pay, they shouldn’t bother to file. No, no, no: Penalties can be assessed for failure to file and failure to pay. The failure-to-file penalty is usually 5% for each month or part of a month that your tax return is late; if your tax return is filed more than 60 days after the due date, the minimum penalty is the lesser of $210 or 100% of the unpaid tax. So don’t make a bad situation worse by failing to pay and failing to file. File anyway.
If the dog really ate your tax return, or if something else happened to prevent you from filing on time, tell the IRS. The IRS does have the ability to abate penalties for reasonable cause (the law, however, generally bars the ability to wipe out interest). If you file late – and you think you have reasonable cause for doing so – you can request an abatement.
Find a good tax preparer. You can ease a lot of your stress by using a good tax preparer. Since it’s immediately after the tax season rush, you want someone who isn’t closing up shop tomorrow with no plans to reappear until next year. Call around. Ask for referrals. Find someone that you can trust. Make sure you feel comfortable. And then follow through.
Pay as much as you can. When it comes to your taxes, if you can pay something – anything – make a payment. If you can’t pay it all at once, there are alternatives, including setting up an installment agreement with IRS. But don’t use a lack of funds as an excuse to do nothing. See again #6.
Plan for next year. Like Christmas, Tax Day comes at the same time every year. But a lot of the stress associated with Tax Day – like shopping for Christmas – can be avoided with a little bit of planning. Maybe this is the year that you invest in a scanner for those receipts. Or you hire that tax pro (see again #8). Or you set up personal finance software to track your income and expenses for the year. Whatever you need to do to ensure that you file on time next year, plan to do those things now. You’ll be glad that you did.