Assuming You Have 6 Extra Months To Get It Together
The standard extension can buy you an extra six months to file, which gets you to the middle of October. But if youre one of the few who get an automatic extension, dont assume you have the same amount of time.
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That out-of-the-country crowd mentioned earlier gets just two extra months to file, for instance the amount of extra time varies for people affected by certain natural disasters.
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Members of the military could get more than six months in some situations.
How To File A Late Tax Return In Canada
The 2018 tax season started on February 26 and ended on April 30. If you are self-employed and planning to file a late tax return this year, be prepared to pay late-filing penalties and interest on any balances owing. Keep reading to learn more about what these penalties entail, how you can apply for relief from penalties and interest, and how to get more organized next year.
How Do I File Returns For Back Taxes
OVERVIEW
When would someone file back taxes, and what does this process typically look like?
Should you file back taxes? It may not be too late to file a previous year’s tax return to pay what you owe or claim your refund. Learn more about why one may choose to file back taxes and how to start this process.
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What If I Don’t Have All Of The Tax Forms I Need To Do My Return
It’s not unusual for someone responsible for getting you a vital tax document to be negligent in getting that form to you. The problem with preparing your return without that information is that it’s likely to result in your filing an incorrect return, and that will leave you with the unappetizing requirement of having to file an amended return with the corrected information.
The smarter thing to do is to be aware of the deadlines for getting your tax forms and then to promptly contact your employer or financial institution if they don’t get the forms to you on time. That way, once they correct the problem, you should still have plenty of time to get your returns prepared and filed.
Assuming The Irs Will Hate You
Theres no need to risk making big mistakes on your tax return or missing valuable deductions because youre rushing to meet the filing deadline and think the IRS will blacklist you for seeking an extension. Filing late is common. In fact, extensions are a fact of life for many investors who dont get their K-1s, which are statements of income from partnerships, until after the tax-filing deadline.
Theres no scarlet letter for filing late as long as you get an extension. If anything, deciding to keep your tax return on your to-do list may warrant a badge of courage.
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Assuming You Have To Ask For An Extension
In a few circumstances, the IRS will give you an extension even if you dont ask for one. Not knowing the rules could cost you time and confuse matters.
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If youre a U.S. citizen or resident who lived and worked outside of the country on the tax-filing deadline, for example, you get more time to file and pay without having to request an extension.
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People affected by certain natural disasters automatically get more time to file and pay, as well check the IRS’s list of qualifying disasters. Some members of the military also get more time automatically, depending on where they are and what theyre doing.
What Is A Tax Extension
Traditionally, Form 1040, the federal income tax form for an individual, is due on April 15th, or the following business day if the 15th falls on a weekend or holiday. If you need more time, the IRS grants an automatic extension, as long as you file Form 4868 by that date. Filing an extension gives you an additional six months to prepare your tax forms and return, no matter the reason you need extra time.
One important thing to note is that filing an extension gives you extra time to complete your paperwork it doesnt give you more time to pay.
If you owe money with your return, youre still required to pay by the April 15th deadline, or you could face more than one fee. Youll need to estimate the amount youll owe based on your income and specific tax situation and make your payment by that date. A late payment could result in other penalties.
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What If I Need Even More Time
The IRS is generous enough to give everyone up to six extra months to file their returns, but the downside is that beyond that point, it’s difficult to get further extensions. There are only a couple of situations in which additional time is available:
- If you’re outside of the U.S., you can file a discretionary extension request to get up to two months of additional time to file your return beyond the October deadline. That puts your new deadline in mid-December. In order to request the extension, you need to send a letter to the IRS that explains why you can’t meet the October filing deadline. Unlike the automatic six-month extension, the IRS is under no obligation to approve your two-month extension request, so if your reason isn’t good enough, you might get denied.
- Members of the military who serve in a combat zone can qualify for automatic extensions of time to file returns. In general, you’ll have at least 180 days after you leave the designated combat zone in order to file your tax return. In addition, if you’re injured and hospitalized as a result of your service in a combat zone or similar area, then you can also qualify for additional time.
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Filing Past Due Tax Returns
File all tax returns that are due, regardless of whether or not you can pay in full. File your past due return the same way and to the same location where you would file an on-time return.
If you have received a notice, make sure to send your past due return to the location indicated on the notice you received.
How To File Back Taxes
If you owe back taxes, you must file a past-due return with the IRS. The process is similar to filing an on-time tax return, but there are a few things to keep in mind.
To start, youll need to locate your tax forms and other financial documents. A past-due tax return requires the same information as a regular tax return. Make sure you have any W2s and 1099s you received during the year in which your back taxes were due. Youll also want to gather any receipts necessary for claiming income tax deductions or credits.
If you dont have all of your documents or arent sure if you do, you can request a tax return transcript from the IRS. You can choose to receive your transcript electronically or by mail. Transcripts are generally only available for the current tax year and each of the last three tax years, but taxpayers may request a transcript from an older tax year by submitting Form 4506-T.
Tax forms are updated often due to legislation changes. When filing back taxes, make sure you are using the original tax forms and instructions for the year you are filing. The IRS provides a database of prior-year forms on its website.
If you need help completing your past-due return, you can use tax preparation software or hire a professional.
However, unlike a regular tax-return, you cannot e-file a past-due return. You must send your late return and your payment to the mailing address listed on your Form 1040, or on a late notice from the IRS if you received one.
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Protect Yourself From Tax
Tax ID theft occurs when someone steals your personal information to file a tax return using your personal data. Usually, the fraudulent tax filer will use your Social Security number to file your return in order to collect a refund. To protect yourself from tax ID theft, you can obtain a six-digit Identity Protection PIN from the IRS. IP PINs are known only to you and the IRS so the IRS is able to confirm your identity when you file your return. Learn more about how the IP PIN works and how to apply.
Penalties For Past Due Taxes
If you fail to file a required tax report, the Comptroller’s office will send you an estimated billing with instructions to file a report providing your actual sales data for the estimated period. Please be aware that failure to file or pay a tax report may result in collection actions including, but not limited to, additional late filing penalties, liens and criminal charges.
Statutory penalty on past due taxes are calculated as follows:
- If you are paying the tax 1-30 days late, add a 5% penalty.
- If you are paying the tax over 30 days late, add a 10% penalty.
- If you are paying the tax after the date referenced on the Notice of Tax/FEE Due, add an additional 10% penalty .
Statutory interest begins accruing on the 61st day after the due date of a required report. The interest rate is a variable rate determined at the beginning of each calendar year. To obtain the applicable rate for a specific tax period, please refer to the webpage titled Interest on Credits and Refunds and on Tax Due.
Additional late filing penalty
For most taxes, a taxpayer who fails to file reports on time will be assessed an additional penalty of $50.00 for each late report. This penalty will be assessed even if the taxpayer later files the report and/or if no taxes are due for the reporting period.
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Gather All Your Documents
Whenever you file a return, youll need all the forms that show your income for the tax year youre filing for. So if, for example, youre filing a return for the 2018 tax year, youll need any W-2s, 1099s, interest statements and other types of income statements that apply to that year.
Hopefully, you saved those documents in a tax records file. If youre missing information, you can request a wage and income transcript from the IRS for a previous year. The transcript will show all the information returns the IRS received on your behalf for that tax year, such as W-2s, 1099s, 1098s, IRA contributions you made and more.
And, if youre claiming certain deductions or tax credits, youll need to have all the necessary documentation, such as receipts for medical expenses or mortgage interest you paid during the tax year.
If You Owe Taxes You’ll Pay A Penalty And Interest
Keep in mind paying late comes with repercussions. For every month that you file late, youâll have to pay an additional 5 percent penalty on the total amount you owe. Itâs important to note that a month doesnât mean 30 days to the IRS â filing your return even one day late means you’ll still be hit with the full 5 percent penalty. On top of that, youâll also pay interest, which will only add to your fees. And if you file more than 60 days late, things become a bit more complex â another reason to submit your return as soon as you can.
If you canât pay the full amount you owe when you file, paying what you can and looking into payment plans with the IRS is better than paying nothing.
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How Long Is My Extension Good For
If you filed an extension by May 17, 2021 , it extends your filing deadline to .
- An extension of time to file your return does not mean an extension of time to pay your taxes.
- If you expect to owe money, you’re required to estimate the amount due and pay it with your Form 4868. As long as you do that, the extension will be granted automatically.
Minimize Penalties And Interest
The IRS can penalize you if you dont file a return or pay any tax you owe by the deadline. Generally, the penalty for not filing is more than the penalty for not paying. You may also be charged interest on any unpaid tax balance.
Filing your back taxes and paying anything you owe may help limit the amount of interest and penalties youre subject to for missing the deadline.
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How The Irs Pays Refunds For Back Taxes
Like other tax returns, the IRS can pay refunds to you via either direct deposit or a check. Make sure to choose the appropriate option on your tax return when you file. If you opt for direct deposit, always double check your account number before filing. You may not be able to get your money back of the IRS sends your refund to the wrong place.
An important exception to note is that the IRS only pays refunds via check for amended returns, which are tax returns you file to fix a mistake from a previous yearâs return. Also keep in mind that it may take about six weeks just for the IRS to process your prior-year tax return .
Request Tax Documents From The Irs
Finding documents from previous years may be challenging for some. Thankfully, the IRS has a form you can fill out to request any tax information they have on file for you for a given year. Form 4506-T allows you to request a transcript of your tax return information, even if you haven’t filed a tax return. You can request information from the last 10 tax years.
The IRS will send the information it has on record, including information found on forms such as W-2s, 1099s, and 1098s. It won’t have information about deductions and credits you may qualify for, though, so you’ll still need to do some work on your own.
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File For Free Through Irs Free File
The IRS offers free tax filing services for taxpayers who qualify . If you still need to file your 2020 tax return, the Free File program is only available until Oct. 15. Free File is a partnership with tax preparation software providers, including Tax Slayer, Tax Act, and FileYourTaxes.com.
If you earn more than the income threshold, you may be eligible to use a different free option to file your taxes, the Free File Fillable Forms. This option isnt for the faint-hearted, though, as youll need to know how to prepare your own tax return.
Can You File A Late Tax Return In Canada
Although the CRA always encourages Canadians to file before the tax filing deadline, filing late is better than not filing at all! You can submit a late tax return using the same methods you would use to file your return on time. You can turn in your taxes using tax preparation software, mailing a return prepared by a tax preparer, or completing the CRA’s General Income Tax and Benefit Package and submitting it through the mail. If you file a late return and don’t owe any taxes, there are no penalties. But, just because you don’t owe the CRA any money, that doesn’t mean you shouldn’t file at all. Whether you file late or on time, filing your CRA tax return is crucial if you want to collect any credits and benefits entitled to you. These include GST/HST credits, Solidarity tax credits , and Canada child benefit payments.
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Will My Refund Be Late Because Of A Tax Extension
The timeline for getting your income tax refund — or your refund plus outstanding stimulus money — depends on when you file. Though you have until Oct. 15 to submit your return if you’ve filed an extension, it doesn’t mean you have to wait that long to file.
The IRS is experiencing delays and has a massive backlog of unprocessed returns because of the pandemic, so in some situations, it could take much longer than the average 21 days to issue refunds. Some refunds, especially for more complicated returns or those that need corrections, are taking up to 120 days.
