Taxes were due to be filed on April 18th, 2022, but if you filed an extension, your deadline is right around the corner. For those that filed for an extension, the deadline to file your taxes is October 17th. If you miss this deadline and owe taxes, you will incur late penalties, as well as interest charges. These incurred costs will also apply if you didn’t pay the taxes that you owed by April 18th. It will cost you more to not file than it will to pay the taxes that are owed. If you’ve filed for an extension, it’s important to know what comes next.
What’s Next?
The standard tax extension allows you to file your tax return after the usual deadline. However, it doesn’t buy you more time to pay any taxes you may owe. That means that if you don’t pay your tax balance by the filing deadline, you’ll get hit with penalty and interest.
Even if you can’t pay it all immediately, pay as much as you can. Penalties and interest are based on how much you owe and for how long.
- Late payment penalties are calculated at 0.5% of the unpaid tax balance per month.
- The maximum you can be charged in late payment penalties is 25% of the unpaid tax.
For example, if your tax balance is $2,000:
- Penalty per month = $2,000 x 0.5% = $10
- Total possible late payment penalty = $2,000 x 25% = $500
If you know you’re going to be out of the country on Tax Day, there is an automatic two-month extension that allows you to hold off filing and paying taxes without penalty, but you’ll still be assessed interest as of the day after the tax filing deadline.
- Interest on unpaid tax compounds daily from the original due date of the return until the date you pay in full.
- The rate is calculated as the federal short-term interest rate, currently .81% plus 3%.
- Interest is applied daily, so for each day you’re late, you’ll owe 0.0104 of the balance.
Master Tax is Here To Help
If you’ve filed an extension and your deadline is coming on October 17th, Master Plan Tax Solutions is here for you! We’re located in Flower Mound, Texas and have the knowledge and experience to help you file and pay your taxes stress free.