Tax season is here, and the federal filing deadline is fast approaching. So, if you haven’t yet filed your federal and state tax returns, now’s the time to gather all the necessary documents and get it done. Or, if you anticipate delays, take the steps needed to file an extension with the IRS to avoid late filing penalties.
Federal Deadline To File Taxes
The federal tax filing deadline is Monday, April 18, 2022. However, taxpayers in some states will have more time to file:
- Maine and Massachusetts: filing deadline of April 19, 2022, due to Patriots’ Day
- Colorado: filing deadline of May 16, 2022 (reserved for wildfire victims)
- Illinois, Kentucky and Tennessee: filing deadline of May 16, 2022 (reserved for winter storm victims)
Active duty members of the armed forces currently serving in contingency operations or combat zones may also get an extended filing deadline.
Tax Filing Extension
If you believe you’ll miss the filing deadline, you can file an extension by April 18th (or April 19th in some areas).
How To File An Extension
You can request an extension to file your federal income tax return using IRS Form 4868 (Application for Automatic Extension of Time To File U.S. Individual Income Tax Return). It can be filed electronically through your tax professional, tax software, or mail using a private delivery service.
How Far Can a Tax Deadline Get Extended?
When you file an extension, you’ll have October 17, 2022, to file your 2021 tax return. Remember that the extension deadline does not apply to unpaid taxes – you’ll need to pay what you owe before the regular filing deadline to avoid penalties.
Tax Payment Extension
If you cannot pay your tax bill on time due to a hardship, use Form 1127 (Application for Extension of Time for Payment of Tax Due to Undue Hardship) to request more time. You could get an extension of up to six months to pay – 12 months in extreme cases.
If You Did Not File An Extension
If You Owe Taxes
If you happen to miss the deadline for filing and owe the IRS, interest and penalties will accrue after 60 days. The IRS assesses a late-filing penalty equivalent to 5 percent of the unpaid balance each month you fail to file, capped up to 25 percent. You could also get a late-payment penalty of 0.5 percent of your outstanding tax debt each month, also limited to t 25 percent.
If You Are Getting A Refund
If you miss the filing deadline but don’t owe taxes, you won’t be assessed a penalty by the IRS. Be mindful that you won’t get your refund until you file. However, the case may be different with your state tax authority.
What To Do If You Can’t Afford To Pay Taxes
Pay With A Credit Card
If you have enough available credit, you can use a credit card to pay your tax debt. But use this method only after you’ve exhausted all other options since you could spend a fortune in interest if you can only afford to make the minimum monthly payment.
IRS Installment Agreement
Consider getting an installment agreement from the IRS to pay federal back taxes over an extended period. Here are your options:
- Short-Term Payment Plan: an option for taxpayers who owe less than $100,000 (with penalties and interest) and can pay in full within 120 to 180 days
- Long-Term Payment Plan: an option for tax taxpayers who owe $50,000 or less (including penalties and interest) and have the ability to make monthly payments for up to 72 months (or six years); businesses who owe $25,000 or less (including penalties and interest) also qualify if they are current on all tax filings
Offer In Compromise
You may be able to settle your unpaid federal tax debt for a fraction of what you owe through an Offer in Compromise (OIC). however, you must meet one of these criteria to qualify:
- Doubt as to Collectibility: you’re unable to pay back taxes within the statutory period because you have insufficient income or assets
- Doubt as to Liability: you have a legitimate doubt that you owe back taxes and believe you are only being assessed due to a misinterpretation of the tax code by the tax examiner or their failure to evaluate the evidence you presented to support your claim
- Exceptional Circumstances (Effective Tax Administration): you’re unable to pay back taxes due to an extenuating circumstance, and remitting payment would be inequitable, unfair or lead to severe financial hardship
Where To Get Professional Tax Relief Help
Maybe you’ve already missed a filing deadline in the past and have unfiled returns or are avoiding filing this year because you can’t afford to pay what you owe. Either way, it’s not in your best interest to keep putting off your tax issues. It’ll only lead to penalties, fees and collection actions by the IRS that could ruin your finances.
The good news is you can have an ally in your battle with the IRS. Instead, you can hire a team of tax experts to help you in your fight and defend you against the IRS and state tax authorities.
