The tax season is a period of time when taxpayers are required to file their tax returns with the Internal Revenue Service (IRS). This period usually starts from around January 1st and ends on April 15th every year.
However, there have been some variations in the tax season’s duration over the years, such as the deadline extension of the 2020 tax year. Likewise, whether you are filing your taxes for the first time or not, it is essential to understand the deadline and gather all required documents on time to avoid unnecessary penalties and interests.
In this article, we will provide you with all you need to know about when the tax season ends and how to file your taxes on time to avoid penalties.
When does the tax season end?
Typically, the tax season deadline falls on April 15th every year. However, the deadline may vary depending on which part of the country you are in and some other factors.
For instance, taxpayers who reside outside the United States or are serving in the military may have longer filing periods to accommodate their unique circumstances. Also, individuals who experience natural disasters, such as hurricanes or floods, may also receive extensions.
It is therefore imperative to keep updated with the IRS news to ensure that you do not miss out on an extension if any applies to you. Failure to file tax returns or make payments by the appropriate deadlines could incur interest and steeper penalties over time.
What are the penalties for late filing or payment of taxes?
Late filing: If you fail to file your taxes by the due date, you will have to pay a late filing penalty of 5% of your unpaid taxes per month or part of a month late. This penalty can accumulate up to 25% of your unpaid taxes or more.
Late payment: If you do not pay your taxes by the deadline, you will be charged a late payment penalty of 0.5% of your unpaid taxes per month or part of the month late. This penalty can also accumulate up to 25% of your unpaid taxes or more.
Interest: The IRS also charges interest on unpaid taxes from the due date of the tax return until the date the tax is paid in full. Interest accrues daily and compounds quarterly, meaning it can double your tax debt over time.
How to avoid penalties for late filing or payment of taxes
There are a few ways to avoid penalties for late filing or payment of taxes. These include the following:
File your taxes on time
The best way to avoid penalties for late filing is to file your taxes on time, even if you cannot afford to pay the full amount owed. Filing on time will help you avoid the 5% late filing penalty that can accumulate up to 25% of your unpaid taxes.
Request an extension
If you are unable to file your taxes on time due to reasons such as medical issues or natural disasters affected by your area, you can request an extension. An extension will grant you an additional six months to file your tax returns.
To request an extension, file Form 4868, which asks for pertinent information, such as your name, address, and social security number, by the deadline. Keep in mind that this is just an extension on filing your return, not an extension on paying the taxes you owe.
Make an estimated tax payment
If you cannot pay the full amount of taxes owed by the deadline, you can make an estimated tax payment to avoid the late payment penalty. You can estimate your taxes owed on Form 1040-ES or by using the IRS’s online payment system.
An estimated tax payment will reduce the amount of interest and penalties accrued. The remaining balance can be paid off in installments.
Contact the IRS
If you are having difficulty paying your taxes or have unique circumstances affecting your ability to file or pay on time, contact the IRS. They may be able to offer a payment plan or other options to help you settle your tax debt.
Conclusion
Filing taxes and paying taxes are essential responsibilities of citizens annually. Understanding these responsibilities’ deadlines and your obligations when filing is crucial to avoiding IRS penalties and minimizing your interest and debt owed.
It would help if you also remembered that staying compliant with tax reporting and payments can save you a lot of stress and possibly significant fines in the long run. So, ensure you prepare all related documents on time, adhere to deadlines, and try to file at the earliest opportunity instead of waiting until the last minute.
