by Richard E. Reyes, CFP
Its the morning before taxes are due and you might be freaking out right now. Well for that reason I thought it might be worth talking to you about what happens if you miss the deadline and wind up filing late or maybe not filing at all.
The short answer is that you might run the risk of the IRS coming after you for penalties and interest, and actually the IRS feels that failing to file is much worse than failing to pay on time. As the penalty for failing to file is stiffer than the penalty of failing to pay on time.
Now since you have waited this long to file I would suspect that you might be somewhat of a free spirit and might feel well what if I file later, will the IRS really ever find out I did not mail it in on tax day?
My answer to that is that I realistically don’t know. Rumor has it that the IRS does not bother checking postmarks since they are also receiving millions of returns on or about the same time. So you might be OK and they might not even notice. However, if you file late and the IRS catches you the interest and penalties will actually accrue from the actual due date to the postmark date.
So what if you file or pay late and get caught?
The penalties and interest are stiff. Thus if you cannot afford the amount due, you should still file your return in a timely manner and explore alternative payment options with the IRS. In addition, you can also file an extension which will allow you another 6 months to maybe figure things out. However, please keep in mind that as long as you request an extension and pay at least 90% of your actual tax liability by the original due date you will avoid any underpayment penalties.
Now if the IRS owes you money the rules are a little different. You should obviously want to file as soon as possible in order to collect your money. But if you are expecting a refund there is actually no need to file on time. Penalties and interest are based on your unpaid balance not on the money they owe you. So you don’t have to file on time if you are owed money. Keep in mind though that you have only three years to claim your money or you’ll forfeit the money that you are due.
What ever your case may be – just be safe. File on time, pay what you owe. If you just cant get to it for some reason, just file an extension and be safe. Its not worth playing games with the IRS.
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Wealth and Business Planning Group, LLC (The Financial Quarterback™) is a Registered Investment Advisor in the State of Florida that provides Fee Planning and Asset Management. Depending on your state of residence, Wealth and Business Planning Group, LLC (The Financial Quarterback™) may not be able to immediately provide services. For more information go to www.thefinancialqb.com. Richard E. Reyes, CFP is an Investment Advisor and President of Wealth & Business Planning Group, LLC (The Financial Quarterback™).
