In the U.S., “tax day” — the day income tax returns are due from most individuals — has been set as April 15 since 1955, although in years in which April 15 falls on a weekend or a holiday, tax day is pushed back to the next business day. This year, however, the tax filing and payment deadlines for all taxpayers who file and pay their federal income taxes on April 15, 2020, have been automatically extended until July 15, 2020. If you don’t file your taxes by then, the IRS can slap you with a fine for every month that passes before you file. In most cases, the penalty for filing late is 5 percent of the taxes you owe. However, that penalty can then stack up each month, eventually maxing out at 25% if you continue to drag out the process.
How Can You Get an Extension?
If you know you won’t be able to meet the tax day deadline, you can request an extension from the IRS. Filing Form 4868 can give you up to an extra six months to file. Doing this can help protect you from the penalties associated with late filing, and it can also preserve your ability to receive a tax refund if you’re eligible. However, filing this form does not protect you from the interest that accrues on the taxes you owe but have not yet paid, which amounts to 0.5 percent per month.
What If You Don’t Pay at All?
The worst thing you can do is avoid filing your taxes altogether without asking the IRS for help. As a result, you could be subject to a huge fine as well as being subjected to an intense and time-consuming audit. In extreme cases, the IRS may put a lien on, or even seize, your personal property. Fortunately, the IRS is usually willing to work with Americans who have tax debts, offering options such as payment plans. You might also find it worthwhile to consult with a law firm or other organization that may be able negotiate a settlement with the IRS.