Missed the Tax Deadline This Year? Fret Not
If you didn't file your 2020 federal tax return or apply for an extension before May 17, don't let that stop you from filing your 1040 and paying your taxes ASAP if you owe money to the IRS. In addition to the interest charged on any taxes you owe, you may face separate penalties for late filing and late payment.
Late filing penalty is 5% of tax due for each month (or part of a month) your tax return is late. If your return is more than 60 days late, the minimum penalty is $435 (for tax returns filed in 2021) or the remainder of the tax due on your return, whichever is lower. The maximum penalty is 25%. The late payment penalty is 0.5% of the unpaid balance for each month (or part of a month) in which the tax is levied. Ten days after the IRS issues a final letter of intent to seize or confiscate the property, the rate rises to 1%, which can reach 25% of unpaid tax.
You see, the longer you wait, the higher the fines.
If you have a good explanation for missing the sign up or payment deadline, you may be able to avoid penalties (but not interest). What is a good reason? Think fire, natural disasters, serious illness, etc. A lack of money alone is not a sufficient reason for not filing or paying on time. If you would like to request an exemption from the fine, enclose a declaration with your return.
If you’re sure a refund is due, don't worry. The IRS does NOT penalize taxpayers for late filing if they’re supposed to be receiving a refund.
Finally, what about your state tax return? The due date for most government tax returns was Jan. However, three states - Iowa (June 1), Louisiana (June 15), and Maryland (July 15) - give you more time to submit. Check with the state tax office where you live for more information on state tax deadlines...and the penalties for not meeting them.