LAST TAX CALL - October 15th Tax Filing Deadline

The October 15th tax deadline is just over two weeks away. This can be a crucial date for many taxpayers, especially those who have received extensions to file their tax returns. Making sure to file by this date can have significant financial consequences in the form of minimizing penalties and interest. Whether you're a business owner or an individual taxpayer, it’s essential to understand the ins and outs of this deadline to avoid unnecessary stress and added costs.

What Is the October 15th Deadline?

For most taxpayers, the regular tax filing deadline falls on April 15th each year. However, if prior to or on April 15th, you requested a tax extension, the final deadline to submit your tax return without facing late-filing penalties is October 15th.

The extension gives taxpayers an additional six months to get their paperwork in order.

One of the most important things about the filing of an extension that most taxpayers do not realize is, the extension is for filing the return only. It is not for paying taxes. If you owed taxes by April 15th, you were still required to make a payment by then. The extension only gives you more time to file the paperwork.

What are the consequences of missing the October 15th Deadline?

If you miss this deadline, you could face several financial consequences, including:

1. Late Filing Penalty the IRS imposes a 5% penalty on the unpaid tax for each month your return is late, up to a maximum of 25%. If you are more than 60 days late, the minimum penalty is the lesser of $435 or 100% of the unpaid tax. Filing even a day late can trigger this penalty, so it’s crucial to file on or before October 15th.

2. Failure to Pay Penalty If you didn’t pay your tax liability by the original April deadline, you will incur a Failure to Pay penalty. This is typically 0.5% of the unpaid taxes per month, up to a maximum of 25% of your unpaid tax. The rate may increase to 1% if the IRS sends you a final notice of intent to levy.

3. Interest on Unpaid Taxes In addition to penalties, the IRS charges interest on any unpaid taxes from the due date (April 15th) until you pay in full. The interest rate is determined by the federal short-term rate plus 3% and is compounded daily, which can add up quickly if you delay payment.

   
   

How to Avoid Penalties and Interest

To avoid or limit penalties and interest, there are a few important steps you should take:

• File on Time: Even if you can’t pay the full amount, file your tax return by October 15th to avoid the 5% late-filing penalty. The Failure to File penalty is typically higher than the Failure to Pay penalty, so filing the return on time is essential.

• Pay as Much as You Can: Even if you can’t pay the entire amount of tax owed, pay as much as possible by the April 15th deadline (or as soon as possible afterward). This will minimize the penalties and interest that will accrue on the unpaid amount.

• Set Up a Payment Plan: If you can’t afford to pay your taxes in full, you can apply for an IRS payment plan. This will allow you to pay off your balance over time while avoiding more severe penalties, although interest will still accrue.

  
  

What If You Can’t File by October 15th?

If you're still unable to file by October 15th due to extraordinary circumstances, you can request an additional extension by filing Form 2350. This form is typically used by U.S. citizens or residents who live abroad and need extra time to meet the tax requirements of a foreign country. However, it's important to note that additional extensions are granted only in rare cases.

What Happens After October 15th?

After October 15th, if you still haven’t filed your return, the IRS may begin certain actions to establish what the tax their records show is owed and collect these taxes. This process is started with written correspondence in the form of

• Issuance of a Notice of Deficiency (CP3219N): This is the IRS notice, notifying you the IRS believes you owe taxes. This notice outlines how much the IRS believes you owe, including any penalties and interest.

• Start Collection Actions: If you continue to ignore your tax obligations, the IRS can take collection actions such as garnishing your wages, placing a lien on your property, or levying your bank accounts.

• Audit Risk: Filing late without a valid extension or failing to file altogether can increase your chances of an IRS audit. Late returns may raise red flags for the IRS, especially if you owe significant amounts of money.

  
  

The October 15th tax filing deadline is a crucial date for those who have filed for extensions. Missing this deadline can result in significant financial penalties and accrued interest, making it essential to act ahead of time. Even if you owe money, it's better to file your return on time and work out a payment plan with the IRS rather than incurring additional costs.

 If you have not completed your tax returns, remember tax professionals are available to assist. If you have completed your paperwork, make sure to double-check your deductions, and submit everything before the deadline. With a bit of planning, you can avoid the penalties and interest that come with missing the deadline and keep your finances in good shape.