The last day to file taxes in 2023 is quickly approaching for Americans who requested extensions for their 2022 federal income tax returns.
If you’re one of the many who haven’t filed yet, here’s what you need to know.
When Is the Tax Extension Deadline for 2023?
While a tax extension typically gives you until Oct. 15 to file a return, the date falls on a Sunday in 2023 so taxes are due by the following Monday, Oct. 16. You can file electronically up until the deadline or can mail in your return, so long as the parcel is postmarked by the Oct. 16 deadline.
[SEE: Every Tax Deadline You Need to Know.]
Can You Get an Additional Extension for Your 2022 Taxes?
Oct. 16 is the final tax deadline for 2023, but the IRS does make rare exceptions.
“In some circumstances, the IRS permits another extension to victims of widespread natural disasters, some members of the military and taxpayers living outside of the U.S.,” says Levon L. Galstyan, a certified public accountant at Oak View Law Group in California.
These must be very special circumstances, though. Taxpayers who were affected by the flooding in Vermont, for example, have until Nov. 15. 2023 to file.
“If the six-month extension is still not enough time to file, you can request — in writing — another extension,” says Crystal Nickson, a financial coach who has worked with the IRS’ Volunteer Income Tax Assistance program.
“That said, a taxpayer would have to prove a severe hardship in order to have the request approved,” she adds.
While it may be possible to get another extension, the IRS is urging taxpayers to file as soon as possible. By filing sooner, you can get your refund sooner and reduce interest and fees on any amounts you owe.
The Costs of Paying 2022 Taxes Late
Although a tax extension gives you up to six extra months to file, it doesn’t give you any extra time to pay. Taxpayers are still required to pay the estimated amount owed by Tax Day, which was April 18.
[Read: How to File a Tax Extension.]
While that can seem odd because you won’t know exactly what you owe until you file, you’re supposed to take your best estimate. If you end up owing more than you paid, the IRS charges interest and failure-to-pay fees on the unpaid amount.
Failure-to-pay fee. The failure-to-pay fee is equal to 0.5% of the tax owed after the due date for each month, or part of a month, that the tax remains unpaid. This amount can total up to 25% of what was owed.
For example, if you file your tax return on Oct. 16 without making a payment on Tax Day and end up owing $1,000, you’d also be required to pay 0.5% for each of the six months the total amount owed went unpaid. After six months, the total fee would be $30.
Interest charges. Additionally, you’ll be charged interest on any unpaid amounts. The interest rate for individual taxpayers is the federal short-term rate plus 3%. As of Oct. 1, taxpayers will owe 8% per year on underpayments.
If, as in the example above, you file on Oct. 16 and owe $1,000 in taxes, you’d also owe six months of interest. The interest charges would be based on half of the annual rate of 8% — approximately 4% of $1,000, so would total $40.
“If you think you won’t be able to pay what you owe, you can set up a payment plan — an agreement you make with the IRS to pay your federal tax bill over time,” Galstyan says. “But you’ll still have to pay interest and late payment fees until your balance is paid off.”
The main benefit of setting up a payment plan is to avoid other collection attempts by the IRS.
[What to Do if You Can’t Pay Your Taxes]
What If You Haven’t Filed Your Taxes or an Extension?
If you haven’t filed your return for the 2022 tax year and didn’t request an extension, you’ll be hit with a failure-to-file penalty.
This fee is equal to 5% of your unpaid taxes for each month, or part of a month, that the return is late — up to 25% of the amount owed. That said, if you’re charged a failure-to-pay and failure-to-file penalty in the same month, the maximum fee is 5% per month total, up to 25% of the amount owed.
To file a free tax extension, individuals typically must submit Form 4868 and businesses need to fill out Form 7004 or 1138. However, other forms may be required in special situations such as if you’re living abroad or serving in a combat zone. You can file the required form by mail or electronically using IRS Free File.
Alternatively, you can indicate you’d like to file for an extension when you make your estimated payment via credit or debit card, using Direct Pay or through the Electronic Federal Tax Payment System.
What If You Miss the Final Oct. 16 Filing Deadline?
If you miss the final filing deadline, the IRS will charge you a failure-to-file penalty. As mentioned above, it’s 5% and up to 25% of the amount owed. However, the fee is retroactive. Steven J. Weil, Ph.D., enrolled agent and president of RMS Accounting, says, “The penalties start accruing from the original due date in April, not October 16.”
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The Last Day to File Taxes in 2022 Is Coming. What to Know If You Still Haven?t Filed. originally appeared on usnews.com
Update 10/12/23: This story was published at an earlier date and has been updated with new information.
