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If you missed the April 15 tax deadline, the clock is already ticking on penalties and interest — but there are still steps you can take to reduce the damage.
Experts say taxpayers should file immediately, even if they can’t pay their full bill, and pay as much as they can to avoid the steepest penalties. Those who still owe can apply for a payment plan to manage the remaining balance.
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Another benefit of filing early is locking in your return and protecting your identity from scammers. (Michael Bocchieri/Getty Images)
The IRS says most applicants receive immediate approval or denial when applying for a payment plan online.
“You can still file your return and at least eliminate the failure-to-file penalty, which can reach up to 25% of any tax owed, with interest compounding,” said Mark Steber, chief tax officer at Jackson Hewitt Tax Services.
The IRS can impose multiple penalties, including failure-to-file, failure-to-pay and underpayment penalties, which are assessed separately and can accrue interest daily, Steber said.
He added that consulting a tax professional early can help taxpayers navigate their options and potentially reduce the total cost.
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The IRS issues over $400 billion in refunds each year, meaning that early filers can put that money to use sooner. (iStock)
“In many cases, the total cost — including taxes, penalties, interest and professional fees — ends up being higher than if you had sought help earlier,” Steber said.
“The worst thing you can do is ignore the deadline,” he added. “Many people think they’ll deal with it later, but that can lead to mounting penalties and unnecessary financial risk.”
Filing as soon as possible and exploring IRS payment options can help taxpayers regain control of their situation and minimize added costs.
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The IRS still requires a tax payment by April 15, even if you file for an extension. (Kayla Bartkowski/Getty Images)
Steber said taxpayers should view filing as part of a long-term financial strategy, not just a once-a-year obligation.
“Your tax return is one of your largest financial transactions each year,” he said. “Giving it proper attention can pay dividends over time.”
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