What Happens If My Tax Return Is Late?

by Tim McMahon ; Updated July 27, 2017
Sometimes it isn't possible to file your taxes by April 15.

Filing a Federal Tax Return is often a time-consuming process requiring collecting significant amounts of information, and sometimes you must wait for forms from banks, brokerages, ex-spouses or other people. And sometimes due to circumstances, it is impossible to file your taxes by the April 15 deadline. So, what do you do, and are there penalties?

Automatic Extension of Time to File

The first thing to do when you realize that you will not be able to meet the April 15 deadline is to file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This form guarantees you an additional six months to get all your information together and file your return. However, it does not relieve you of any interest due if you owe taxes. So, when you file Form 4868, you need to make your best guess as to how much tax you will end up owing and pay any additional taxes due in order to eliminate that additional interest.

Late Payment Penalty

If you pay your taxes late, even if you file Form 4868 (see References), you might still be liable for a penalty if you do not pay estimated taxes properly. This is one half of 1 percent per month that the taxes are due. This is in addition to the interest due. The IRS states, you will owe interest no matter whether you have a good reason for not paying on time, but it states, "The late payment penalty will not be charged if you can show reasonable cause for not paying on time." However,you have to have paid at least 90 percent of the tax due in order to be eligible for the exemption.

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Late-filing Penalty

In addition to interest and late payment penalties, there also is a late-filing penalty. It is usually charged if your return is filed after the due date (including extensions). This penalty is fairly stiff at 5 percent per month up to a total of 25 percent of the total tax due. If your return is more than 60 days late, the minimum penalty is $135 or the balance of the tax due on your return.

U.S. Citizens Abroad

U.S. Citizens living abroad are automatically entitled to an additional two months in order to file their taxes, possibly to compensate for the additional time it takes to get the necessary information in some parts of the world. You do not need to file an additional form if you qualify for this extension; you simply attach a note to your return. However, if you need additional time beyond the two months, you can only get an additional four months by using Form 4868 listed above.

References

About the Author

Tim McMahon began publishing the "Moore Inflation Predictor" and "Financial Trend Forecaster" newsletter in 1995 and has published it every month since. He is also the editor of InflationData.com and the author of "Healthy Tongue Secrets," a book on dealing with problems like thrush and geographic tongue. He holds a Bachelor of Science in engineering management from Clarkson University.

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