Missed the Filing Deadline? Get Tax Extension Details Here…

Editor’s Note: What should you do if you didn’t file a tax return yet? Mike Slack from The Tax Institute offers insight on tax extension options based on three common situations. Read on!

1 – You filed a tax extension.

If you filed Form 4868 (via mail or electronically) by the federal tax deadline you’re in pretty good shape, regardless of whether you expect a refund or owe the IRS. As long as you file your tax return by the extended tax deadline (Oct. 15) the IRS will not assess the failure to file penalty.

If your return results in you owing the IRS, you may be subject to a late payment penalty, plus minimal interest. The late payment penalty is 0.5% of the amount you owe per month (or partial month) up to 25%; plus interest rate on underpayments, which is around 4%.

If you don’t file your tax return by the extended return due date, the IRS will assess the failure to file penalty from April 19 forward and your extension will essentially be ignored.

2 – You didn’t file a tax extension, but expect a refund.

If you expect a refund, but didn’t file an extension, you’re still in great shape. To be honest, the IRS is more than willing to hang on to your refund as long as you will let them. Whenever you’re due a refund the IRS will not charge any late filing penalties or charge interest.

3 – You didn’t file an extension and expect to owe.

If you didn’t file an extension and expect to owe the IRS, they will begin to charge failure to file and failure to pay penalties after the tax deadline. The failure to file penalty, or delinquency penalty, runs at a rate of 5% per month (or partial month). (It maxes out at 25%.)

If it already has been 60 days since Tax Day, your situation is worse. The IRS asserts a failure to file penalty of at least $135. For example, if you didn’t file an extension and only owe the IRS $1, they’ll still charge you the $135 penalty because you’ve filed past the 60-day window.

Tips on Getting the IRS to Excuse Penalties

Both the failure to file and pay penalties may be excused by IRS if your lateness is due to “reasonable cause.” Common qualifying excuses include death or serious illness in the immediate family, postal irregularities, or bad advice.

The IRS also has a little-known policy called “First Time Abatement” where they remove penalties from taxpayer returns with clean tax compliance history. To qualify, you must have not had tax penalties in the past for the previous three years (except for the estimated tax penalty), must have filed all required returns, and must be current with all required tax payments.

Hopefully your situation may not be as bad as you thought! Whether you need to file an extension, already have, or need an extra hand as you pay delinquent taxes, contact H&R Block to help you out.