You may be filing taxes late in tax season if…
In the past, more than 1 in 3 people who filed their tax return before the deadline waited until April to file. This year, people may be taking a little extra time to file because of all the tax reform changes.
A look at those filing their tax return late in previous years shows they are:
- Just as likely to have complex returns: 76 percent of April returns were Form 1040s (instead of the shorter forms, 1040A or 1040EZ, available before 2018) compared to 77 percent earlier in tax season.
- Still likely to get a refund: 67 percent of April returns got a refund compared to 81 percent of early filers.
- More likely to get a smaller refund: the average refund was 14 percent lower, but still more than $2,400.
- More likely to get help from a person: tax professionals and volunteers prepared 61 percent of e-filed April returns but only 56 percent of returns e-filed in January to March.
- More likely to paper file: 55 percent of all paper returns were filed during April.
Then there are those really late filers. People who file their returns after the April deadline were:
- Even more likely to have complex returns: 87 percent of returns received after April were “long form” 1040s.
- More likely to get bigger average refunds: while fewer taxpayers got a refund after April, those who did got much larger refunds on average – more than $4,000.
- Less likely to get a refund: only 53 percent of returns processed after April got a refund.
- Much more likely to use a tax professional: tax professionals prepared 85 percent of returns e-filed after April compared to 58 percent of e-filed returns from January to April.
Procrastinators beware of penalties
Taxpayers who still have not filed a tax return should file either a return or an extension by the April 15 deadline before it’s considered a late tax return.
The monthly penalty for not filing a tax return is 10 times greater than the penalty for not paying in full. The best way to avoid this penalty, which could quickly add up to 25 percent to their tax bill, is to file a completed tax return or apply for an extension. However, an extension doesn’t apply to any payments due.
In other words, the extension to file is not an extension to pay for taxpayers who owe the IRS money. Taxpayers must pay at least 90 percent of their 2018 tax bill by April 15 or they will face late-payment penalties and interest.
The monthly penalty for not paying in full is 0.5 percent of the unpaid balance per month with a maximum of 25 percent. The monthly penalty for not filing a tax return is 5 percent and capped at a maximum of 25 percent. For example, for someone who owes $1,000, the failure-to-pay penalty starts at just $5 per month, but the penalty for failing to file a return starts at $50 per month and thus maxes out very quickly.
Payment options for taxpayers who owe the IRS
By working with the IRS, taxpayers may reduce or in some cases eliminate their penalties. If a taxpayer can’t pay their balance due all at once, they have payment options including requesting a short-term extension to pay, making an installment agreement or even paying with a credit card. In some instances, the taxpayer may qualify for an offer-in-compromise.
If they’re having trouble paying their tax bill, taxpayers can save time and money when they are short on both by talking to a tax professional about their options. A tax professional can help them determine the best way to pay their tax bill in their unique situation.
More procrastinators in final rush to file tax returns
With so many taxpayers waiting until April to file, taxpayers who use a tax professional should book their appointments now and gather the documents they need with the help of a customized tax prep checklist. Taxpayers who file on their own online or use downloaded software should also start as soon as possible.
Learn why the tax filing extension deadline in October is so important and why so many people filed an extension this year.
Millions of Americans still need to file. Find out how procrastination experts challenge the stigma of filing taxes last minute and explain ways to overcome it or use it to your advantage.
The IRS offers an extension to file a tax return, but not to pay any taxes due. Learn about what is required to avoid or minimize penalties for missing the tax deadline.
Learn about the benefits of filing taxes early and when people choose to file. Whenever you want to file and however you want to do it, H&R Block is here to help.