What Happens If You File Your Taxes Late?

You have until April 15 to file your taxes. If you miss this deadline and have not requested an extension, then it is important for you to file them as soon as possible.

Why should you file for an extension?

If you file an extension, then you will be protected from the penalties that you will incur from filing taxes late. You may be forced to pay a penalty fee of 5 percent for every month that you do not file your taxes. Here is an example of how much your tax bill can increase from filing your taxes late.

You owe $2,500. You file three months late. You could end up having to pay $375 extra.

How long does the extension last?

Your extension will last for six months. This means that you will have until October 15 to finish filing your taxes. Keep in mind that filing an extension does give you more time to pay your taxes.

What happens if you did not file for an extension?

The consequences of not filing can vary. It will depend on whether you are owed money or you owe money. A Utah CPA can help you understand the consequences that you may face.

What happens if you are supposed to get a refund?

There are no penalties for filing late if you are owed a refund. Seventy-five percent of people in Salt Lake City get a refund every year. However, any Utah CPA will recommend that you file on time for the following reasons.

* You will not be able to get your money back unless you file the taxes.

* The Statute of Limitations for IRS auditing will not begin until you file your taxes.

What happens if you owe a balance?

If you have not paid your total tax balance by April 15, then a penalty fee of 0.5 percent will be added to the balance every month. The maximum penalty that you can be charged is 25 percent of what you owe. You will also have to pay a late filing fee if you did not request an extension.

What if I cannot pay my taxes?

Many people in Salt Lake City cannot pay the taxes that they owe. You can get an offer in compromise, pay with your credit card or get an installment agreement.

Installment payments

You can get a Form 465 Installment Agreement Request to get put on an installment plan. You can get an installment agreement if you owe less than $10,000, and it will not take you more than three years to pay off the balance. However, it is important to note that you will have to pay a set up fee.

Offer in compromise

You may be able to pay less than what you owe. This is known as an Offer in Compromise. You have to prove that you will not ever be able to pay the full balance owed. You will also have to prove economic hardship. You will need a form 656 to request an Offer in Compromise.