People who missed the income tax filing deadline last week might not be contacted by the IRS immediately. But make no mistake: Those who are supposed to file will hear something eventually.
“They’re not going to hear from the IRS right away,” said Cari Weston, director of taxation at the American Institute of Certified Public Accountants.
It takes time, she said, for the agency to receive all the forms necessary to reconcile returns, so nonfilers may not hear until fall at the earliest, and often much later.
But if you didn’t file, and you owe the federal government money, penalties and interest are already accruing. So it’s best, said Cindy Hockenberry, director of education and research services with the National Association of Tax Professionals, to take steps to head things off as quickly as possible.
Hockenberry said the best thing that those who missed the deadline can do “is get their return filed, prior to hearing from the IRS.”
The longer you wait, the more penalties and interest pile up. Even if you can’t pay what you owe, you should still file as soon as possible because there’s a “failure to file” penalty of 5 percent a month of the amount owed, up to 25 percent, she said. In contrast, the “failure to pay” penalty is just one-half of 1 percent.
“It racks up really fast,” she said, “so you don’t want to put it off.”
The IRS did not have the number of late-filed returns for this year immediately available, but the agency said the vast majority of people file and pay their taxes on time. In 2015, the IRS received about 150 million individual tax returns, while about 1.1 million people did not respond after the agency notified them that it had not received a return.
Those who don’t owe taxes don’t have to worry — there’s no penalty due. But if you are owed a refund, you can’t claim it until you file your return. You have three years from the original due date to file and claim your refund, Hockenberry said. After that, you will forfeit the money. Waiting to file if you are owed a refund makes little sense because the IRS won’t pay interest on your money.
“File,” she said, “and get that money back.”
Another reason to file the return is that while you may not think you owe taxes, the IRS may reach a different conclusion, Weston said. Then you will owe both the taxes and the accompanying penalties.
It’s also possible that if you don’t file, the IRS may file a “substitute” return, prepared using documents that it receives from employers and other sources. The agency will then assess taxes based on your income, but without itemized deductions.
If you can’t afford to pay taxes you owe right away, you should file and pay what you can, said Vladislav Lapochkin, an enrolled agent, or federally authorized tax preparer, in Las Vegas. Then, contact the IRS about paying in monthly installments. If you owe less than $50,000, you can apply online. The plan can extend for as long as 60 months.
Even if you owe more than $50,000, the agency will probably be agreeable to a payment plan.
“The IRS just wants to collect the tax,” Weston said.
Here are some questions and answers about filing after the tax deadline:
Q: Can I still request an extension to file my tax return?
A: No. You can’t file for an extension after the official tax filing deadline. One exception, according to the IRS, is if you were living outside the United States or were on military duty outside the country on the filing deadline. In that case, you get an extra two months — until June 15 — to file your taxes or to file an extension.
Q: What if I live in a declared disaster area?
A: TheIRS said this week that it would extend the tax filing and payment deadline to Sept. 1 for several counties in Texas affected by the recent flooding.
Q: When I’m finally done filing, how long should I save my tax records?
A: At least three years, and preferably six, Hockenberry said. When filing your records, she said, it’s helpful to note any hurdles or problems you encountered, so you can be better prepared to file on time next year. Weston advised that doing a bit of organization now can make things go more smoothly next tax season. Using tax or financial software can help, but even designating a “tax return” drawer in your home for storing documents and forms is better than nothing.
“At least,” she said, “it’s a central location.”