If you find yourself unable to meet the IRS tax filing deadline, don’t panic—there are ways to manage the situation. It’s important to understand the process of filing for a tax extension, the consequences of paying your taxes late, and what steps to take if you’re unable to settle your tax bill by the due date. By being informed, you can avoid the worst penalties and get back on track with minimal stress.

For individuals who have been impacted by natural disasters such as Hurricane Beryl in Texas or Hurricane Debby across several Southeastern states, the IRS has provided much-needed relief by extending the deadlines for filing federal tax returns and making certain tax payments. This extension includes returns that were initially postponed beyond the April 15, 2024 deadline, as well as other payments that would have been due in the aftermath of the storms. For those affected, additional time is a lifeline, allowing them to focus on recovery efforts without the added pressure of immediate tax deadlines. You can find more specific details in the IRS news release related to Hurricane Beryl for those in Texas, and the release regarding Hurricane Debby for those in the Eastern United States.

Typewriting a tax return

Tax Year 2024: Important Deadline and Key Information

The federal tax return filing deadline for tax year 2024 is set for April 15, 2025. It’s essential to be aware of this date and take action if you’re unable to file on time to avoid unnecessary penalties and stress.

Key Points to Remember

  • Tax Deadline: The official federal tax return filing deadline for 2024 taxes is April 15, 2025.
  • Filing for an Extension: If you’re unable to meet this deadline, filing for an extension by April 15, 2025, is crucial. This will give you extra time to submit your tax return and protect you from failure-to-file penalties, which can be costly.
  • Missed Deadline Without Extension: If you miss the tax filing deadline and fail to file an extension, and you owe taxes, you may be subject to a late filing penalty. This penalty is generally 5% of the unpaid tax per month, plus accumulating interest.
  • No Penalty with a Refund: If you are expecting a refund from the IRS and miss the deadline, there’s usually no penalty for failing to file on time—even without requesting an extension. However, be aware that this might not be the case for state tax filings.
  • Filing Late: If you missed the deadline and didn’t file for an extension, it’s highly advisable to file your taxes as soon as possible. This will help minimize penalties and get you back in good standing with the IRS.

Make sure to take action early, whether filing or requesting an extension, to avoid penalties and interest charges on unpaid taxes.

Why You Should File for a Tax Extension

Filing for a tax extension provides you with additional time to submit your tax return, helping you avoid the penalties that can result from missing the deadline. By filing an extension, you can push back the tax filing deadline and protect yourself from the penalties associated with late filing.

Penalties for filing late can accumulate quickly, charging 5% of the unpaid tax for every month or part of a month that your return is late. For instance, if you owe $2,500 and file your taxes three months late, you’d face a penalty of $375. Here’s the breakdown:
($2,500 x 0.05) x 3 months = $375.
If you’re more than 60 days late, the minimum penalty will be either $100 or 100% of the unpaid tax, whichever is lower. Filing for an extension can prevent these penalties from mounting.

Filing an extension eliminates failure-to-file penalties as long as your tax return is submitted by the extended deadline. This extra time allows you to gather necessary information and file accurately without the pressure of looming penalties.

If you’re facing tax challenges, Austin & Larson Tax Resolution offers complete tax relief services to help resolve your tax debt. Their team provides personalized tax resolution to guide you through every step of the process.

How Long Is My Tax Extension Valid?

If you requested an extension for your 2024 tax return by the original April 15, 2025, deadline, your new filing deadline is extended until October 15, 2025. This gives you an extra six months to prepare and file your tax return without facing a late filing penalty.

However, it’s important to remember that an extension to file does not grant you more time to pay any taxes owed. If you anticipate owing money, it’s recommended that you estimate the amount due and submit it along with Form 4868 to avoid potential interest or late payment penalties.

What Happens If You Didn’t Request an Extension?

If you missed the deadline and didn’t request an extension, the outcome depends on whether you owe taxes or are expecting a refund.

If you owe the IRS, filing late without an extension could result in penalties and interest on the unpaid amount. The longer you wait to file, the more these fees can accumulate. It’s important to file as soon as possible to minimize additional charges.

However, if the IRS owes you a refund, there’s no penalty for filing late. You still have time to claim your refund, but keep in mind there is a three-year limit to file and claim any refund due. After that, the IRS will no longer issue a refund.

If You’re Expecting a Refund: Why Filing Still Matters

Here’s a lesser-known fact about federal taxes: if the IRS owes you a refund—as is the case for about 75% of taxpayers—there is no penalty for missing the filing deadline, even if you didn’t request an extension. However, keep in mind that this rule applies only to federal taxes, and some states may still impose penalties for late filing.

Still, there are some good reasons to file on time, even if you’re owed a refund:

  • You won’t receive your refund until you file, so it’s in your best interest to file as soon as possible to get your money back quickly.
  • The IRS statute of limitations for auditing your return doesn’t begin until your return is filed. Filing sooner starts that clock, giving you peace of mind down the road.
  • Some specific tax elections must be made by the filing deadline, even if you expect a refund. While this applies to only a small percentage of taxpayers, it’s still something to keep in mind.

Filing early can provide peace of mind and ensure that you get your money back without unnecessary delays.

If You Have an Outstanding Balance: Understanding the Consequences

If you didn’t pay the full amount of taxes owed by the filing deadline, you may face some financial repercussions:

  • Late Payment Penalty: You will likely incur a late payment penalty of 0.5% for each month, or part of a month, that your tax remains unpaid. This penalty can accumulate until the total amount due reaches a maximum of 25%.
  • Interest Charges: In addition to the late payment penalty, interest will accrue on the unpaid balance, further increasing the total amount you owe.

If you didn’t request an extension before the deadline, the situation becomes even more serious:

  • Late Filing Penalty: In this case, you will also be subject to a late filing penalty, which amounts to 5% of the unpaid tax for each month, plus the accrued interest. Similar to the late payment penalty, this late filing penalty can also reach a maximum of 25% of the total amount due.

Important Warning: No Statute of Limitations on Unfiled Returns

It’s crucial to understand that whether you are expecting a refund or owe taxes, one significant factor remains unchanged: if you fail to file your tax return, the IRS has no time limit on how long they can pursue you for unpaid taxes. This means that they can go back indefinitely to assess and collect what you owe.

In essence, not filing your return can lead to potentially severe consequences. The IRS can audit your financial history and impose penalties at any time if you haven’t submitted your tax return. To avoid these complications, it’s always best to file your taxes—even if you’re concerned about owing money. By filing on time, you protect yourself from the risk of endless scrutiny and ensure that you remain in good standing with the IRS.

A woman preparing the tax return documents

What to Do If You Owe the IRS but Can’t Pay

If you find yourself owing money to the IRS but are unable to pay the full amount, there are several options you can consider:

  1. Credit Card Payments: You may have the option to pay your tax bill using a credit card. This can be a quick solution, but be mindful of potential high-interest rates that could apply.
  2. Installment Agreements: The IRS offers installment agreements that allow you to pay your tax debt in manageable monthly payments over time. This option can help you avoid larger penalties while you work to pay off your balance.
  3. Offer in Compromise: If you’re experiencing significant financial hardship, you may qualify for an Offer in Compromise, which allows you to settle your tax debt for less than the full amount owed. This requires a thorough application process, but it can be beneficial if you meet the criteria.

Alternatively, you can file your return and wait for the IRS to send you a bill. However, be aware that this approach may result in additional interest and penalties on your outstanding balance. Generally, the failure-to-pay penalty is less severe than the failure-to-file penalty, so it’s usually advisable to file your return on time, even if you cannot pay the tax owed. Taking proactive steps can help you manage your tax situation more effectively.

Can I Use a Credit Card to Pay My Taxes?

Yes, you can indeed pay your tax bill using a credit card, and there are several methods to do so. You also have the option to utilize bank loans, including personal loans or home equity loans, to cover your tax obligations. Alternatively, you can take a cash advance from your credit card to help pay off your tax bill.

Various third-party payment processors allow you to use your credit card to settle your tax debt. However, keep in mind that these providers typically charge a convenience fee, which is usually around 2.5% of the total payment amount. This fee is in addition to any interest or finance charges that your credit card company may impose. Therefore, while paying by credit card can be a quick solution, it’s important to weigh the additional costs against your overall financial situation.

Can I Pay My Taxes in Installments Over Time?

If you owe more taxes than you can afford to pay at once, it’s essential to file your tax return regardless of your financial situation. By submitting your return—even without sending a payment—you can avoid incurring a late-filing penalty, which would only worsen your financial burden.

To request an installment payment plan with the IRS, attach Form 9465, Installment Agreement Request, to your tax return. This form allows you to set up a manageable monthly payment plan to pay off your tax debt. Approximately 2.5 million taxpayers are currently benefiting from such arrangements, and the IRS has recently made it easier to qualify for these plans.

In the past, the IRS required a detailed review of your financial situation—assets, liabilities, and cash flow—to determine your payment ability. However, if your tax balance is under $10,000 and you propose to pay it off within three years, this extensive review is no longer necessary.

Additionally, you can now apply for an installment agreement online, making the process more accessible. More information about this option can be found on the IRS website.

While an installment plan can be helpful, consider that borrowing money from a bank or another source to pay off your tax bill may be more advantageous. The IRS charges a setup fee of $52 for direct debit installment agreements and $105 for non-direct debit plans; eligible low-income individuals may qualify for a reduced fee of $43.

Keep in mind that the IRS also imposes an interest rate on late payments, which was 8% for the fourth quarter of 2024 and can change quarterly. In addition, there’s a late-payment penalty of 0.25% per month. This combination of interest and penalties can add up, effectively equating to an annual cost of around 11%. Therefore, evaluating all your options carefully can help you make the most informed decision regarding your tax obligations.

Can You Negotiate Your Tax Debt with the IRS?

Yes, under specific circumstances, the IRS can negotiate and accept a reduced payment for tax liabilities through a process known as an “Offer in Compromise.” This agreement between the taxpayer and the IRS allows the taxpayer to settle their tax debt for less than the full amount owed. The IRS is authorized to accept such offers under three primary conditions:

  1. Doubt About the Correctness of the Tax: If there is uncertainty regarding the validity of the tax amount assessed, you may qualify for a compromise.
  2. Doubt About Your Ability to Pay: If you can demonstrate that you will likely never be able to pay the full tax amount owed, the IRS may consider your offer.
  3. Exceptional Circumstances: Even if the tax amount is correct and you have the means to pay, if doing so would cause undue hardship or be fundamentally unfair, the IRS may accept a lower payment.

To initiate this process, you will need to complete the Form 656: Offer in Compromise Package and submit it to the IRS. This package includes Form 433-A, which is the Collection Information Statement for Wage Earners and Self-Employed Individuals, and Form 433-B, which is for businesses.

Be prepared to provide comprehensive documentation and detailed explanations as the IRS may request additional information to evaluate your offer. There are several options for settling accepted Offers in Compromise, including a reduced total payment or a structured plan of scheduled monthly payments.

However, it’s important to understand the risks involved. If you default on an accepted Offer in Compromise, the IRS may pursue legal action against you, and they can reinstate the original tax debt along with any accumulated interest and penalties. Therefore, it’s crucial to ensure that you can meet the terms of any agreement made with the IRS before proceeding.

A woman thinking about tax extension

Can I Seek an Extension to Complete My Tax Payment?

Yes, you can request an extension of time to pay your tax through Form 1127: Application for Extension of Time for Payment of Tax. However, it’s essential to understand that the IRS has strict legal requirements that must be met for your application to be considered:

  1. Timely Submission: Your Form 1127 must be received by the IRS by the tax payment due date. This means you need to act quickly to ensure it’s filed on time.
  2. Financial Disclosure: You must provide a detailed statement outlining all your assets and liabilities as of the end of the last month, along with an itemized record of all income and expenditures over the three months leading up to your request. This information helps the IRS assess your financial situation accurately.
  3. Demonstrating Hardship: Simply stating that you find it inconvenient to pay your tax when due is insufficient. You need to clearly illustrate that making the payment would result in undue hardship. This involves showing that paying the tax on time would lead to a significant financial loss, and you do not have access to cash or cannot secure funds through the sale of assets or borrowing.
  4. Limitations on Extensions: If approved, extensions to pay are typically limited to six months. Additionally, the IRS will require some form of acceptable security before granting the extension. This security can be in various forms, such as a bond, a notice of lien, a mortgage, or other means, depending on your individual circumstances.

In certain situations, such as federally declared disasters, the IRS may provide additional relief options, including extensions. For more information on this relief, you can visit the IRS Disaster Relief page. If you think you qualify for an extension, it’s advisable to gather all necessary documentation and submit your request as soon as possible to avoid penalties and interest.

Conclusion

Filing your taxes late can feel overwhelming, but you have options to ease the process and manage your obligations effectively. Understanding how to file for an extension is essential to avoid hefty penalties. If you’re facing challenges, remember that filing late may result in penalties, but getting your return in as soon as possible minimizes these costs.

Moreover, if you owe money but can’t pay in full, there are options like installment agreements or even negotiating your tax debt through an Offer in Compromise. It’s crucial to stay proactive—whether it’s filing on time, seeking an extension, or addressing any outstanding balances.

If you find yourself dealing with unfiled returns or back taxes, Austin & Larson Tax Resolution is here to help. Our team understands the stress that comes with tax issues and is committed to providing tailored solutions to get you back on track. Don’t let tax anxiety hold you back; contact us today to take the first step towards a tax-debt-free life!

FAQs

What should I do if I missed the tax filing deadline?

If you missed the deadline, file your taxes as soon as possible. This helps minimize penalties and shows the IRS you’re taking responsibility.

Can I still file for an extension after missing the deadline?

Unfortunately, you cannot file for an extension after the deadline. However, you should still file your return to avoid further penalties.

What happens if I owe taxes but can’t pay them all at once?

You can apply for an installment agreement with the IRS, allowing you to pay your tax bill in manageable monthly payments.

Are there penalties for filing late if I’m expecting a refund?

No, there are typically no penalties for late filing if you are due a refund. However, it’s best to file promptly to receive your money sooner.

How can Austin & Larson Tax Resolution assist me?

We provide personalized tax relief services to help resolve your tax debts and guide you through the process of filing and communicating with the IRS.