Missed the tax filing deadline? Here’s what you need to do

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The deadline to file your 2021 tax return or request an extension has passed, but the good news is that it hasn’t been very long and there’s still time to minimize the damage. So here’s a handbook of what to do if you’ve missed the tax deadline, and what steps you can take to make sure it doesn’t happen again.

Step 1: Go ahead and deposit now

First, if the IRS owes you a refund, don’t worry too much. the tax deadline technically applies to you, but the late-filing penalty is based on the amount of money you owe. If you’re owed money, there’s no penalty the IRS can impose — but the agency is fine with keeping your tax refund as long as you let them.

On the other hand, if you owe money to the IRS, file your tax return as soon as possible — even if you can’t pay. Here’s why. The penalty for non-payment is 0.5% of your outstanding balance for each month or partial month late. But the penalty for not reporting is 5% of your outstanding balance each month. In other words, not filing costs you 10 times just pay late.

So do whatever you need to do to file your tax return now. Look for the documents you are missing, and even if there is something you are still waiting for and you missed the deadline to file an extension, file with the information you have. For example, you may have made a charitable contribution in 2021 and are waiting for the charity to send you a copy of the documentation. There is a procedure for filing an amended tax return later.

Step 2: Determine how to pay

If you owe the IRS money, there are several options for paying. You can pay through your checking or savings account electronically or send a check to the IRS. You can also use a credit or debit card to pay through one of the IRS payment partners, and you can even pay cash at any of the IRS Commercial Partners.

If you can’t pay now, another option is to apply for an installment agreement with the IRS, which allows you to pay part of your outstanding tax bill each month for 72 months. This will not prevent late interest and penalties from accumulating, but it will prevent all other IRS collection activity.

Step 3: Plan ahead for next year

In closing, one of the smartest things you can do if you missed this year’s tax deadline is prepare to make sure it doesn’t happen again. Here are some tips to help you plan ahead:

  • Remember that all taxpayers are entitled to a six-month extension to file (but not to pay), but you must request an extension before the normal April tax deadline.
  • Start gathering the documentation you need as soon as possible. If mid-February is coming and you’re missing something you need to file, be proactive and ask for it.
  • If you owe the IRS money this year, consider changing your withholding through your employer’s payroll department. If you are self-employed, consider increasing your estimated quarterly tax payments.

This list isn’t exhaustive, but the bottom line is that there’s no good reason not to file your tax return (or request an extension) by the April tax deadline. If you’ve already missed this year’s tax deadline, the good news is that you still have time to do some damage control, but the sooner you act, the less financial hardship you’ll face.

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