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Missed the tax-filing deadline? Read on to see why the sooner you can submit your return, the better. [[{“value”:”
Taxes are due every year on April 15. But if the tax-filing deadline has come and gone and you’re still sitting on an unfinished return, you may be wondering just how much worse you might make the situation by letting it sit a bit longer.
Maybe the whole reason for not filing your taxes on time is that work is busy or you’re going through a personal matter that’s monopolizing your focus. The truth is, it’s always best to request an extension when you don’t think you’ll have your taxes done by the deadline. But since we’re already past the deadline, if you didn’t do that already, it’s too late now.
That said, there can be negative consequences for being late with a tax return. So don’t take the attitude of “If I’m going to be late, I might as well be really late.” Instead, get moving on that tax return ASAP.
When you’re due a tax refund
As of late March, the average IRS refund this year was $3,081. When you’re due a refund, there’s no penalty for filing your taxes late. But you’re effectively penalizing yourself by letting the IRS keep your refund even longer instead of depositing that cash into your bank account — especially if your refund is in line with the average.
What’s more, let’s say you owe $3,000 on a credit card. For every passing day you don’t repay that balance in full, you’re accruing interest on it (unless it’s a 0% interest card and you’re in your introductory period). So why wouldn’t you want your refund ASAP? It could allow you to pay off that balance and minimize the financial sting.
When you owe the IRS money
If you think you owe the IRS money from 2023 and you missed the tax-filing deadline, pay close attention: You must do your best to file that return as soon as you can.
When you owe the IRS money, you’re penalized for filing taxes late. That penalty is equal to 5% of your unpaid tax bill per month or partial month your return is late, up to 25%.
So let’s say you owe the IRS $3,000. If you file your tax return by April 30, you’ll only be looking at a penalty of $150 for that partial month you were late. But beyond that, every month or partial month you’re late is going to cost you another $150. That could add up to a lot of money.
Also, there’s a penalty for paying your tax bill late. The penalty there is less harsh initially than the penalty for failing to file your return on time, as it’s only 0.5% per month or partial month you’re late, up to 25%.
So if you didn’t pay a $3,000 tax bill by April 15 and you pay it by April 30, you’re only looking at a penalty of $15. But even though that’s not the same as $150, why let those $15 penalties keep adding up month after month?
If you missed the deadline for submitting your taxes, it matters when you file at this point. And regardless of whether you owe money or you’re owed a refund, it’s in your best financial interest to file your taxes as soon as possible.
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