Although the busy tax season deadline came on April 15, many individuals and business owners opted for an extension to file their taxes. Requesting an extension is easy, and it gives those who filed an extension an additional six months to submit their tax paperwork. This means that any outstanding filings must be submitted by October 15. With an additional six months (now only four months left) on the table, it can be tempting to postpone filing until fall. However, it is best to file as soon as possible. Here’s why.
The extension you used on or before April 15 only delayed the filing process, it did not delay the payment of what you owe. As such, if you have an outstanding tax bill, it is essential that you submit your payments immediately, as failure to do so can result in many penalties and additional fees.
This is the number one reason as to why promptly filing your taxes matters. Not submitting your taxes on time can cause you to have a balance that is inflated by penalties and interest. The Internal Revenue Service (IRS) imposes a 0.5% failure-to-pay penalty, based on the total amount of taxes owed, for every month or partial month a tax bill goes unpaid. This amount can accumulate to reach a total of 25%.
In addition to the penalties, you’ll have to pay interest on what is owed. Although the interest rate can fluctuate, as of the first quarter of 2019, the interest rate is six percent.
With only four months left until the October filing extension deadline, it’s best to act now. Waiting to file your taxes can increase the number of penalties and interest you owe, causing you to pay more in the end. If you would like assistance navigating tax law with regards to your extension filings, contact us today. One of our experienced tax professionals in our Orange County office can cross-examine your finances and minimize your personal or business liabilities. For more information on other financial topics, check out our blog.