It’s not exactly a secret that tax returns are due every year on April 15. But sometimes, a situation arises where you need more time to file your return.
Perhaps you waited a bit too long to find an accountant and couldn’t get one by mid-April to complete your return. Or maybe you had a personal situation you were distracted by.
The good news is that the IRS allows filers who can’t submit their taxes on time in April to request an extension. An extension buys you six extra months to complete your return. And you don’t even have to make up a sob story about a sick turtle to get the IRS to give you that leeway. Extensions are granted automatically as long as they’re requested by the April tax-filing deadline.
If you got an extension this year, though, you should know that your 2023 return is due on Oct. 15. And since that deadline is right around the corner, it pays to get moving to avoid potentially costly penalties.
Don’t be late on your tax return again
It’s one thing to not be ready with your tax return by mid-April. But at this point, you don’t want to file your taxes beyond Oct. 15 for one big reason — it could cost you a lot of money.
If you don’t owe the IRS any money for 2023, but rather, are due a refund, then technically, the agency won’t care if you submit your taxes after Oct. 15. That’s because the IRS gets to hang onto your refund for longer — so why should it have a problem with that?
Of course, in that scenario, you’re penalizing yourself by delaying your tax refund. But if you’re not desperate to get that money back, then conceivably, missing the Oct. 15 extension deadline isn’t a big deal.
However, if it turns out you owe the IRS money from 2023, missing the Oct. 15 deadline could mean getting hit with a failure-to-file penalty equaling 5% of your unpaid tax bill for each month or partial month you’re late, up to 25% of your unpaid taxes. If you owe $2,000 to the IRS and don’t file your 2023 taxes until Oct. 30, it’ll cost you $100 right off the bat.
You should also know that while a tax extension gives you more time to submit a return and avoid the failure-to-file penalty, it doesn’t give you extra time to pay your actual tax bill. So if you owe the IRS $2,000 from 2023, guess what? You’ve been racking up interest and penalties on that sum since mid-April. The sooner you pay it, the sooner you can stop the bleeding.
What if you can’t pay your tax bill in full?
If you know you owe the IRS money from 2023 and don’t have the funds in your savings account to pay up, don’t just ignore your tax return. At the very least, file it by Oct. 15 and simultaneously reach out to the IRS to get onto a payment plan. This allows you to pay off your tax bill over time.
Remember, the IRS doesn’t take kindly to unpaid taxes. If it discovers you owe money and don’t make good on it, the agency can garnish some of your wages. But if you keep up with your installment plan payments, that won’t happen — you’ll be considered current even if you still have a large balance that won’t be paid in full for a while.
The good news about filing a tax return in October is that it tends to be a less busy time for tax professionals than April. You may be able to quickly find an accountant to help you.
And if not, you may be able to file your own return. Check out this list of the best tax software to find a program that makes your filing a cinch.
If your tax situation isn’t complicated, filing your own return may be more doable than expected. However, if you own a small business, then it generally pays to hire a professional, since your return could get complicated due to different requirements and deductions you may be taking.
