If you filed a Federal Income Tax extension for your 2017 tax return, the deadline is right around the corner. In order to avoid any penalties for filing late, it is important to prepare now and be ready for the filing deadline.
Deadline
If you were granted a 2017 six-month extension, you have until October 15, 2018. These extensions automatically extended your state income tax deadline as well.
Six-Month Extension
The standard six-month tax extension allows you to file your tax return after the normal April 15th deadline. However, it didn’t give you more time to pay any taxes you may have owed. That means that if you didn’t pay your tax balance by the April 15th filing deadline, you’ll get hit with the penalty and interest along with the amount owed.
Late Filing Penalty
If you owed taxes for 2017 and didn’t pay them when you filed the six-month extension, you’ll be charged interest, which is currently set at 3%.
If the October 15th deadline comes and goes and you still don’t file or pay, there will be a 5% failure-to-file penalty that you will owe on top of everything else.
Interest on Unpaid Taxes
If you owe taxes, interest will be charged on unpaid tax compounds daily from the original due date of the return until the date you pay in full. The rate is calculated as the federal short-term interest rate which is currently at .81% plus 3%. Interest is applied daily. For each day that you’re late, you’ll owe 0.0082% of the balance.
Compounding interest results in a daily recalculation of the principal amount plus the accrued interest. This means you pay a lot of money if you are late.
Tax Extension Reasons
If you filed an IRS tax extension, you are in good company. Lots of individuals and businesses file extensions. Here are some common reasons why people ask for extensions:
- Unexpected life event
- Need more time to pull the information together
- Not able to make it a priority because life has been too busy
2018 Taxes
As we approach 2019, it would be a great time to get the help you need to be proactive about organizing and filing your 2018 taxes on time. Contact a full-service public accounting firm that can help you with this goal.
Joshua Wilson, CPA, PC is a full-service public accounting firm that specializes in accounting, tax preparation, tax planning, & business development for small businesses in Monroe, GA and the surrounding areas. Give Joshua a call today to set up a consultation at 770-856-1309 or email him at josh@joshuawilsoncpa.com.