So, I procrastinated to the last minute on my taxes, only to discover I don’t have all the information I need.
The information will be mailed today but no way I get it in time to complete my taxes by April 15.
What are my options? What is the penalty for filing late? For paying late?
I suspect I’ll owe a small amount, hundreds likely, surely not more than $1000. I won’t really know until I get the missing info as it pertains to income.
I’m not asking for legal advice just the benefit of other’s experience.
File for an extension. They’re automatically granted for a three-month period.
If you suspect you owe something, and want to minimize or avoid penalty and interest for late payment, send in a payment. If you overpay, you’ll get it back as a refund.
I think you’ll find the penalty an interest for late payment in this situation is rather modest, particularly if you’ve been “paying as you go” so far, and provided you don’t delay very long in filing the completed return.
Unfortunately, I don’t think there is a clean solution. I always file for an extension but I can safely assume that I will be getting a refund so I fill in the extension form simply by saying the amount I owe is equal to the amount I paid. When I do my return later, the number I said owed on that form becomes a meaningless number. That’s never been a problem provided that I really am getting a refund.
If you think you owe a small amount then you can do the same as me and I guess you’ll end up paying a small penalty or you can always pay them an estimate now which you’ll get back eventually if you overpay. You’ll avoid a penalty that way.
I have no idea how “friendly” they are but a polite letter about “unable to get required information in time” might achieve something.
Sometimes you can know exactly. I just finished a return where the client’s tax due and Recovery Rebate Credit were balancing each other. A small reduction in tax would be offset by a reduction in the credit so we could be confident of the amount due.
More often, you just take a good guess. You think you had $100 in interest and $5,000 from your partnership and you pay based on that.
There are two penalties when it comes to taxes, by the way. The failure to file penalty is 5% of the amount owed, per month, up to five months. That penalty is what extensions are for. As long as you get the return in before October 15, you’ll avoid that.
The second penalty is 0.5% per month as interest on amounts unpaid. That starts accruing on April 15 whether you file an extension or not. What you want to do is pay a high-end estimate of what you think you owe. When you finalize the numbers, any overpayment can be a refund or be applied to the next year.
To reiterate the essence of what other people have said: File an extension, and with it send payment based on your best guess as to what you’ll end up owing.
The penalty for late filing is much greater than the penalty for late payment.
Since the Feds only charge 6% APR on underpayment, I always arrange to owe them a bunch by Apr 15th. Even if i screw up and pay late, as long as I file on time the interest is less than I can earn on my money. Lending them money for free is dumb; don’t do it. Filing late is dumber; *really *don’t do that.