Tax Day 2024: Here's what to do if you can't pay your taxes by the deadline

Release time：2024-05-22 06:30:43 Source：Stellar Signals news portal

Tax Day is here - and the IRS has told taxpayers that they have 'options' if they cannot pay their taxes in time for the deadline. 

April 15 is the deadline for filing an income tax return and paying taxes in most states. If you think you will not be able to submit your return in time, you can apply for an extension by today at the latest. 

But it is crucial to remember that even if you receive an extension until October 15, you still have to pay any taxes due by today's deadline. 

An extension may provide a grace period to file, but it does not give an extension to pay - so you will face fees and interest charges if you owe tax. 

If you cannot pay what you earn in full, you should still file your return by April 15 and pay what you can, according to the IRS. 

The IRS has told taxpayers that they have 'options' if they cannot pay by the deadline

'Millions of taxpayers across the nation will be working on their tax returns during the final hours, and people should remember they have many ways to get last-minute help,' IRS Commissioner Danny Werfel said in a statement. 

Taxpayers can apply for an online payment plan, the IRS said, if they are unable to pay in full by the deadline. 

The IRS imposes a penalty for filing your return late and another for paying your taxes late. 

'By filing by the deadline, taxpayers will avoid failure to file penalties and interest -even if they're unable to pay,' the agency said. 

The IRS offers a short-term payment plan, which gives an additional time of up to 180 days to pay the balance in full. Taxpayers must owe a total balance of less than $100,000 in combined tax, penalties and interest. 

The long-term payment plan is available if your balance is less than $50,000 including tax, penalties and interest. You have to pay monthly, and you have up to 72 months to pay off the money. 

Though interest and late-payment penalties continue to accrue on any unpaid taxes after April 15, the IRS said, the failure-to pay-penalty is cut in half while an installment agreement is in effect. 

Taxpayers should receive an immediate response if they have been accepted or denied onto a payment plan without calling or writing to the IRS. 

IRS Commissioner Danny Werfel told taxpayers they have many ways to get last-minute help 

The failure-to-file penalty is typically 5 percent of the tax owed for each month or part of a month the return is late, with a maximum penalty of 25 percent.  

For example, if you owe $1,000 in taxes, you will pay $50 for every month or partial month your return is late. 

If your return is more than 60 days late, the minimum penalty for not filing taxes is $485 or the entire amount of tax owed - whichever is smaller. 

The late-filing penalty maxes out after five months of your return being late, but other fees and interest may continue to accrue.  

The late payment penalty, or failure-to-pay penalty, is a separate fee which is 0.5 percent per month or partial month, with a maximum fee of 25 percent of unpaid taxes. 

The unpaid money will also begin building interest, which is 8 percent per year under current rates. This is compounded daily - meaning it will add up quickly.

Experts are also warning taxpayers to be aware of how time zones could affect their filing deadline depending on where they live.

Taxpayers have until midnight on April 15 to submit their return to the Internal Revenue Service (IRS).

'One thing people may not think about when it comes to tax deadlines is time zones,' said David Straughan, a researcher and writer at MarketWatch Guides

But expert David Straughan warns that the cut-off is actually up to three hours earlier in some parts of the country. 

'One thing people may not think about when it comes to tax deadlines is time zones,' said Straughan, a researcher and writer at MarketWatch Guides.   

'The IRS is located in Washington, D.C., which operates off of Eastern Standard Time (EST). That means the deadlines it sets are based on EST. 

'So, when the IRS says that the deadline is midnight, April 15, that deadline is actually 9pm on the west coast, 10pm in the mountain time zone and 11pm in the central time zone.'

He warned that it does not matter if you miss the filing deadline by a few days or a few minutes - late is late in the eyes of the IRS. 

'Tax penalties start accruing as soon as you are late in your filing if you owe money,' he said. 

Related articles