Filing your income taxes late?  April 15th is the typical deadline to submit income tax returns.  Maybe some documents are missing.  Perhaps despite your best efforts, you will not be able to meet that deadline.  The reason doesn’t matter.  Recall The Money Skinny™ mission is to save you time and money.  Let’s take a look at what steps to take if you will miss the deadline and file your income taxes late.  At the same time minimizing interest and penalties incurred.

Submit Form 4686 If Filing Taxes Late

Request a time extension from the IRS for more time to complete your federal income tax return.  Here is information about extensions and Form 4686 Extension of Time to File Your Tax Return from the IRS website.  This form gives an extension of filing time by moving the deadline out six months.  However, it doesn’t change the amount of taxes owed.  Extensions are granted automatically.  Submit Form 4686 before the deadline.  View this as a temporary reprieve.  In summary, the tax return monkey is still on your back until the actual return is filed.

State Income Tax Return

Reside in a state that levies income taxes?  Don’t forget to check filing requirements with your state if your state tax return will be late as well.  Form 4686 applies to the federal income tax return.  Do an internet search to find the correct state form to request a time extension.

Interest Charges When Filing Taxes Late

Interest is owed on any taxes due after the date of the tax return.  It accumulates on any taxes owed even when Form 4686 has been filed.  Here are details on Topic 653 – Interest Charges from the IRS website.

Penalties When Filing Taxes Late

Two penalties may apply to an income tax return that is filed late.  One penalty is a failure-to-file.  Avoid that penalty by filing Form 4686 for a time extension mentioned above.  A second penalty is a failure-to-pay penalty for paying taxes owed late.  Getting a refund?  There is no penalty.  A refund is giving the IRS more time to hold your money.  Owing money triggers the penalty.  This is What to Know about Late Filing and Late Paying Penalties from the IRS website.

Pay Anyway Even if Taxes Late

Think you will owe additional taxes?  Estimate the taxes owed and pay anyway to reduce or avoid the failure-to-pay penalty.  Submit IRS Form 1040-ES with the payment.  Be sure to note that the payment applies to your 2016 liability.  Here is more information on Estimated Tax Payments from the US Tax Center.

An Example of Filing Taxes Late

Suppose you haven’t received or can’t find a W2 from an employer.

• Submit Form 4686 to the IRS by April 15th.  View this as a temporary reprieve.  This avoids a failure-to-file penalty.
• Check your state filing requirements.  Request a time extension from your state.
• Estimate the earnings of the missing W2.  Add paystubs.  Review deposit information.
• Use the estimated earnings to calculate federal income taxes owed.  Submit IRS Form 1040-ES with the payment.  This reduces or avoids a failure-to-pay penalty.
• Pay state income taxes on the estimated earnings as well.
• Prepare the federal and state income tax returns when you receive the W2.

Hurry

The deadline for income tax return filing is April 15th.  If you will be filing your income taxes late, submit Form 4686 to request an extension.  To minimize interest and penalties, estimate what you owe.  Send that payment to the IRS.  Estimate and pay your state income taxes, too.  Your future self will thank you.