4 Late-Filing Tax Mistakes You Must Avoid


Tax filing, an already complicated subject, can be even more difficult with the slightest of mistakes. The thought of wrong tax filing can be worrying for taxpayers, let alone the idea of filing late. Although filing taxes after the annual April deadline can be usually harmful, still you can do some damage control. There is always a right way to do it and several wrong ways.

Most big companies have hired support for tax filing, however, there are individual tax preparation services as well to help individuals in their taxes. Coming back to the critical matter of filing taxes late, here are a few mistakes to avoid:

Doing Nothing in April

If due to any reason, you have to file your tax late, IRS is fine with it. Just a request for a tax extension by filing Form 4868 will get you more time. However, the catch is that you have to request the extension by the April deadline. If you forgot to do so, you have opened a door to the late filing penalty of 5% (maximum 25%) of the due amount of every partial or complete month for which your return is late.

Assuming that Tax is all You Will Owe

Paying late directly means paying more, as you will owe interest on every outstanding amount after the April deadline, even in the case you get the extension. The IRS may also enforce a late payment penalty fee, which is generally 0.5%/month (maximum 25%) of the outstanding tax that is not paid by the deadline. In a few words, it will be a good idea to pay as much as possible in April before requesting an extension.

Assuming You’ll Always Have to Ask for Extension

In some circumstances, the IRS offers an extension even if you didn’t request one. However, not knowing the rules can cost time and confuse matters. If you are a U.S. citizen or a resident who worked and lived outside the country on the April deadline, you will automatically get more time to file and pay taxes without asking for an extension. People who are affected by certain natural calamities also get more time.

Assuming that You Get Complete 6 Months to Prepare Taxes

The normal extension can buy you an extra period of 6 months for tax filing, but if you are one of the few people who got an automatic extension, do not assume you have the same time duration. The out-of-the-country people mentioned earlier gets only 2 extra months. Therefore, you must know your late-filing deadline to avoid further difficulties.

Conclusion

Filing late taxes is common, it is not a situation of extreme concern, if you know the regulations in and out. However, if you aren’t familiar with them, you can always seek the help of someone who does. Individual tax preparation services have comprehensive knowledge and expertise in such cases, and they can easily get you out of trouble.



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