Despite the fact that being required to pay taxes is one of the few guarantees in life, many people still miss the April 18 income tax deadline. The Internal Revenue Service announced in early April that two out of three people had already filed their taxes this year, with just over 107 million tax returns filed and 82 million refunds disbursed, averaging about $2,800 each. But for the last third of people who scrambled to complete their tax returns — and those who didn’t make it in time — Tax Day can be a stressful date. Restaurants and stores try to take the sting away with deals and freebies, but that might not be enough consolation if you’re fearful the government is sharpening its knives to come after your tax forms.
The first rule of late tax filing is not to panic. The second is to determine what happens next. The rules and consequences vary based on whether you owe Uncle Sam money, or if you expect to get a refund this year. No matter what, you’ve got time to fix the problem, but in every case it’s the sooner, the better. Here’s five things to know if you missed the deadline.
1. Filing late is more expensive than paying late
Make no mistake: The IRS might tell you not to panic if you’ve missed the Tax Day deadline, but if you owe money, it’s expecting you to pay up. In this case, every day matters. Even if you think you don’t have the money to pay the fees you owe, file the paperwork.
In cases where paying your tax bill creates a significant burden, you can file a request to pay the balance in installments. In severe cases, you can also propose an “Offer in Compromise,” in which you attempt to reach an agreement with the IRS that allows you to pay less than what you actually owe. In both situations, you need to fill out application paperwork to be submitted with your tax filing. The IRS reviews those applications and makes determinations from there.
Even if you’re just waiting for your next paycheck to come through in order to pay your tax bill, file the paperwork now. Late fees for not filing on time are much higher than not paying on time. The IRS suggests paying as much as you can when you file so the penalties don’t compound on each other. The penalty for filing late is normally 5% of the tax balance for the months or parts of months that you don’t submit the paperwork. The failure-to-pay penalty, on the other hand, is only 0.5%.
The Washington Post did the math to show the difference: On a tax bill of $5,000, filing one month late (which also means you’re paying late) would incur a penalty of $275. Filing the paperwork on time but paying late would only equal a fine of $25, though that doesn’t include interest on either penalty.
The bottom line: You’ll face a penalty of some kind at this point if you owe income taxes to the federal government. But if you file as soon as possible — even if that means sending the check later — your penalties will be much less severe.
2. If you filed an extension, you still have to pay the tab
The IRS offers taxpayers an extension application, which is also due on April 18 and gives people an extra six months to file their tax returns. Typically, the only people who can file an extension past this date are those in the armed forces who are stationed outside of the country on Tax Day. (Those are due by June 15, by the way).
But if you were forward-thinking enough to fill out the extension application before or on April 18, it still didn’t excuse you from paying the taxes you owed. In order to avoid the penalties listed above for paying or filing late, you need to pay at least 90% of your tax bill at the time you submit your extension application. The paperwork can wait, but the government wants its money now. If you missed this memo before the deadline, paying quickly will ensure you pay minimal consequences.
3. If you’re owed a refund, you’re not going to get hit with a fine
The IRS wants its money on time — it has a country to run, after all. But it doesn’t care quite as much if it gets to hold on to the money it owes you for a little longer. You won’t receive any fine for filing late if you’re receiving a refund on your tax return. But arguably the monetary penalty is that you have to wait for that refund behind the other millions of people who filed their returns on time.
In typical cases, the IRS estimates that you’ll receive your refund less than 21 calendar days after the paperwork is processed. But the processing timeline is really what’s key. The IRS offers two tracking tools to see when you can expect your refund to hit your bank account or come in the mail. One is its app called IRS2Go (because who doesn’t want to check their tax information between rounds of Candy Crush) and the other is its more traditional website, Where’s My Refund? (The IRS would like you to know that it updates that information no more than every 24 hours. So if your refund schedule didn’t appear on the first click, it likely won’t on the second, third, or tenth check either.)
Here’s where those sites come into play: You can start checking them 24 hours following the time you submitted your online filing paperwork, but you should wait four weeks to start checking the refund status if you filed on paper and via snail mail. In other words, if you filed late and you sent it through the mail, don’t look for that refund check until at least early June.
4. You can still claim money from as far back as 2013
If filling out your paperwork late this year reminds you of the past years that you should’ve gotten money back but didn’t because you also missed other tax days, perhaps it’s time to reevaluate your habits of procrastination. But it’s also time to fill out additional tax returns from previous years.
The government has a liability to repay your tax refunds up to three years after you were supposed to file for them. As of April 15 this year, the government got to keep all of the unclaimed refund money from the 2012 tax year. But if you file paperwork before next year for 2013, 2014, and 2015, the IRS will send you checks for all the money you’re owed.
The amount of extra money that lines the IRS’s coffers isn’t anything to ignore, either. This year the IRS announced that more than 1 million people had yet to claim more than $950 million in refunds from the 2012 tax year — money that becomes property of the government after the Tax Day deadline.
5. Yes, you can still file online
We’ve said before that if you’re filing late and you’re expecting money back, filing online could be the most efficient option. The IRS allows online filing until October 15, 2015. If the IRS rejected your application for any reason, you can also submit revised paperwork through October 20.
The IRS stops accepting online tax returns after those dates in order to start preparing for the next year’s filings — it’s the cycle that never ends. But you can still file a paper return after those dates.
Follow Nikelle on Twitter @Nikelle_CS