6 Late-Filing Tax Mistakes You Need to Avoid
Assume nothing, and watch the calendar.
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Head of Content, New Verticals Filing an income tax return after the annual deadline usually isn’t the end of the world, but there’s a right way and a wrong way to do it. Here are some common mistakes to avoid if you're filing taxes late.
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- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
Disclosures: TurboTax Free Edition is for Simple Form 1040 returns only (no schedules except for Earned Income Tax Credit, Child Tax Credit and Student Loan Interest). Roughly 37% of taxpayers qualify.
1. Doing nothing
- If you plan to file your tax return late, the IRS is usually fine with that, as long as you request a tax extension by filing Form 4868. The catch, however, is that you need to request that extension by the tax filing deadline.
- If you forget to do that, you may incur a late-filing penalty of 5% of the amount due for every month or partial month your return is late. The maximum penalty is 25% of the amount due. So if you owe, say, $1,000 in taxes, that could mean shelling out an extra $250
.
2. Assuming tax is all you'll owe
Paying later means paying more, because you’ll owe interest on any amount outstanding after the tax filing deadline, even if you get an extension.
- The IRS may also assess a late-payment penalty, which normally is 0.5% per month of the outstanding tax not paid by the deadline (the maximum penalty is 25%)
. You might be able to catch a break if you’ve paid at least 90% of your actual tax liability by the deadline and you pay the rest when you send in your return. - The bottom line is that if you owe taxes, it may be a good idea to pay as much as you can when you request the extension.
3. Assuming you have to ask for an extension
In a few circumstances, the IRS will give you an extension even if you don’t ask for one.
- If you’re 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 without having to request an extension. However, any tax due must be paid by the original April deadline.
- People affected by certain natural disasters automatically get more time to file and pay; check the IRS' list of qualifying disasters
. Some members of the military also get more time automatically, depending on where they are and what they’re doing. - Note, though, that an extension generally gives you more time to file, not more time to pay.
4. Assuming you have six extra months to get it together
The standard extension can buy you an extra six months to file, pushing your new deadline to mid-October. But if you’re one of the few who get an automatic extension, don’t assume you have the same amount of time.
- 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.
- Members of the military could get more than six months in some situations.
5. Forgetting about your extension deadline
If you miss the tax extension deadline, the IRS can apply that 5% penalty for filing your taxes late. And if your return is over 60 days late, you’ll pay either the minimum failure to file penalty set by the IRS (adjusted each year for inflation) or 100% of your tax bill, whichever is smaller
The good news is that the IRS may throw you a lifeline: You might not have to pay the penalty if you have “a reasonable explanation” or it's your first time filing late. You can request penalty abatement by calling the IRS or requesting relief in writing
Best Overall Tax Software
AD
- Federal: $79 to $139. Free version available for Simple Form 1040 returns only.
- State: $0 to $69 per state.
- Expert help or full service filing is available with an upgrade to Live packages for a fee.
Disclosures: TurboTax Free Edition is for Simple Form 1040 returns only (no schedules except for Earned Income Tax Credit, Child Tax Credit and Student Loan Interest). Roughly 37% of taxpayers qualify.
6. Assuming the IRS will hate you
There’s no need to risk making big mistakes on your tax return or missing valuable deductions because you’re 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 don’t get their K-1s, which are statements of income from partnerships, until mid-March.
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- 1. Internal Revenue Service. Failure to File Penalty. Accessed Apr 5, 2023.
- 2. Internal Revenue Service. Failure to Pay Penalty. Accessed Apr 5, 2023.
- 3. Internal Revenue Service. Tax Relief in Disaster Situations. Accessed Apr 5, 2023.
- 1. Internal Revenue Service. Failure to File Penalty. Accessed Feb 9, 2024.
- 5. Internal Revenue Service. Penalty Relief for Reasonable Cause. Accessed Apr 5, 2023.
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