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Picture this: you have less than 3 weeks to file and submit your tax return, but you’re too busy to find the time to do it.
Your anxiety and stress increase as the tax deadline gets closer. What will happen if you file your taxes late?
If this situation sounds familiar, know that you’re not the only one experiencing this problem. The good news is, there are ways to deal with late tax filings!
Now that you know there’s a solution, let’s tackle this together.
Below, we’ve gathered the most practical tips on tax return delays so that you can prevent yourself from paying a lot of money for penalties.
If you know for sure that you’ll miss the tax deadline, immediately file for a tax extension to avoid any possible penalties.
All you need to do is fill in and submit Form 4868 to the IRS either by paper or electronically—but there’s a catch.
Filing an extension for tax return delays only allows you more time to file, not more time to pay your taxes.
In other words, if you owe money to the IRS, you have to estimate and pay at least 90% of your tax liability with your Form 4868. Otherwise, you could face a late payment penalty.
Watch this video to learn how to file for a tax extension online:
When is the deadline to file a tax extension?
The deadline to file a tax extension is the same date to file a tax return, April 18, 2023. An extension will delay your filing deadline to October 16, 2023.
What if I don’t file a tax return delay?
This depends on whether you owe money to the IRS or the IRS owes you money.
1. What happens if you owe money to the IRS?
If you owe money to the IRS, you’ll be fined 4.5-5% per month of the tax amount owed plus interest. The maximum penalty is up to 25%.
It’s important to remember that the penalties for failing to file a tax return or requesting a tax extension are more severe than the penalties for not paying your taxes on time.
Not paying your taxes on time racks up 0.5% each month of the tax amount owed plus interest.
2. What happens if you have a refund from the IRS?
If you’re entitled to a refund from the IRS, you won’t suffer penalties for not filing your tax return by the deadline, even if you don’t submit an extension (this might be different for state taxes).
That being said, you still should get your taxes filed on time. This is mainly because you must file a tax return to get your money back.
How can I know if my tax extension is approved?
Normally, you will receive a confirmation email from the IRS within a day of e-filing Form 4686.
If you sent the tax extension request by post, you won’t receive a confirmation email and will have to call the IRS to check.
Otherwise, you can just wait and see.
Silence means no issues most of the time. The IRS only contacts you if there’s something wrong with your extension.
Why might my tax return delay request be rejected?
Though this situation doesn’t happen too often, it’s still possible if you don’t file Form 4686 carefully.
For example, if you made spelling mistakes or provided information that doesn’t match IRS records, your request might be turned down.
In this case, the IRS will normally give you a few days to correct the errors and resubmit the form.
Another thing that could lead to rejection is unrealistic tax liability estimates. Not only will you not get an extension, but you might even be fined.
Can I request a tax payment delay?
Technically, yes, but the requirements are very strict.
Below is what you need to do in order to have some extra time to pay your income tax:
- File Form 1127 and submit it to the IRS on or before the date that the tax is due.
- Provide a complete statement of all your assets and liabilities as of the end of the last month, plus an itemized list of money you received and spent in the 3 months preceding submitting your request for an extension to pay.
- Show that paying the tax by the original deadline would cause you extreme hardship (if you show it’s only an inconvenience, there’s little chance your request will be accepted).
- Prove that paying the tax on time would result in a significant financial loss and that you don’t have the money or can’t raise it by selling property or borrowing.
Generally, you will get a 6-month extension if your request is approved.
Furthermore, the IRS requires some acceptable security before issuing a payment extension.
Depending on your circumstance, the security could be in the form of a bond, a notice of lien, or even a mortgage.
Extensions are sometimes granted, particularly in the event of federally declared disasters.
Additional relief information is available on the IRS Disaster Relief page.
How can businesses make tax season more manageable?
Tax season can be very complex if you’re a business owner.
Since most business-related expenses are deductible, you should go over your bookkeeping carefully to lower your taxable income as much as possible.
Having your paper receipts available and ready to check will put you at a significant advantage in this case.
Shoeboxed is an online application that helps you clear your piles of documents and digitize them in just a click.
Shoeboxed automatically extracts and categorizes important data from your receipts, which then gets approved by a team of data experts.
You can scan your business receipts, manage expenses, store business cards, and track business mileage, helping you boost productivity and bring in more revenue.
Quick, reliable, and trustworthy, Shoeboxed guarantees to organize your receipts in the best way possible!
Bonus infographic: 4 steps for how to file a tax return delay
The bottom line
Filing taxes isn’t fun, but there are ways to make the process easier.
Always try to file your tax return as soon as possible. In case you can’t, make a tax return delay request.
Remember that a tax extension will only give you more time to file your tax return, not more time to pay your taxes.
Agata Kaczmarek has held a passion for writing since early childhood. A professional writer for many years, Agata specializes in writing articles and blogs focused on finance as someone who holds a Master’s Degree in Accounting and Finance.
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