The calendar confirms the suspicion: Yes, the deadline for filing your federal income tax returns has long passed. The old adage that it is better late than never applies here.
You have missed the deadline, but you can cut your losses – interest and penalties – by filing late rather than waiting for next year to roll around. Of course, if you missed the deadline but filed for an automatic extension, you still have until October 17 to file.
But if you did not get the extension and did not file, then somewhere deep inside of the halls of the Internal Revenue Service, a little bit of math is going on, adding to the taxes you owe. The penalty for filing late is 5 percent of the outstanding tax for every month you are late, up to a ceiling of 25 percent.
What if you’re due a refund? The Motley Fool notes that because of the way the IRS assesses back tax penalties, you are not going to be racking up that extra charge. But you also won’t be getting your refund until you pay your taxes, so it makes sense to file the paperwork.
More important than getting your refund is the simple reality that filing a return is your best line of defense should the IRS come after you. If the agency decides that you were required to file, and sends you a notice of a final filing deadline – and that notice is ignored – it can in some situations begin lien proceedings that can put a real knot in your ability to get credit.
It is also possible that the IRS will pursue criminal charges against people with a history of failing to file. A tax attorney experienced in these complex matters will communicate with the IRS on your behalf, as well as ensure that returns are properly prepared to bring you into compliance.