As a taxpayer, you should know the rules of the IRS for missing tax deadlines. Why, you might ask? Well, the fact is that life can get hectic, which can also lead to missing deadlines. With that said, if you have missed your text deadline, you’re not the only one. Every year, thousands of individuals are late and consequently are unsure about what to do next.
The good news is that you can recover from the missed tax deadlines. Read on to learn more!
How Does the IRS Deal with A Missed Tax Deadline
The first thing you should know is what happens if you miss the tax deadline, especially regarding the actions that the IRS will take. Regarding the IRS, you should know about the two basic penalties that you might have to deal with, especially when you owe money:
- Penalty for a failure to pay
- Penalty for a failure to file
If you are like most people, there is a high chance that stress and anxiety get in the way of your responsibility of paying or filing for taxes. In this case, it is in your best interest to use the TurboTax software and get expert help with filing taxes.
The penalty for failure to file is way higher than the penalty for failure to pay, which is why it is in your best interest to file your taxes before meeting the deadline.
IRS Rules on Penalties and Interest
The IRS has some specific rules for penalties and interest on missed tax deadlines. For instance, if you owe taxes and haven’t filed in time, the IRS will charge you a failure to file penalty, which is typically 5% of your outstanding taxes for each month. On the other hand, the failure to pay the penalty requires you to pay a 0.7% interest every month on the outstanding amount.
You will accrue interest every day on your unpaid tax, beginning from the due date of the return until the payment date.
Tips to Recover from A Missed Tax Deadline
As we mentioned before, the good news is that you can recover from a missed tax deadline. While missing the text deadline isn’t an ideal situation, it is essentially reversible. You should never ignore your taxes. As a matter of fact, you should act faster so you can curb the damage.
If you find yourself in a situation where you can’t pay the full amount, we recommend that you file as soon as you can so you can effectively stop the penalty from accumulating. You might use tech software to help you file as soon as you can. Simultaneously, you must pay as much as you can so you can effectively reduce the penalties and interest.
You can also leverage a payment plan with the IRS and set up monthly payments via your direct debit card.
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Final thoughts
Now you know that missing the text deadline isn’t really the end of the world. However, it wouldn’t be wrong to state that the longer you wait to act and recover, the worse the consequences can become for you. The best way to avoid penalties and interest is to never ignore a missed tax deadline, as it can cost you a lot.