Attention American Procrastinators - You have have 3 extra days to file taxes in 2016
The nearly one in three taxpayers who wait until April to file a tax return have a few extra days this year to do so and avoid late-payment and late-filing penalties. The tax filing deadline is April 18 this year, giving taxpayers three extra days to file a return or an extension and pay any tax due before those penalties kick in.
Filing an extension helps but doesn't exempt procrastinators.
The penalty for not filing a tax return is 10 times greater than the penalty for not paying in full. The best way to avoid this penalty, which could add up to 25 percent to their tax bill, is to file a completed tax return or apply for an extension. However, an extension doesn't apply to any payments due.
The penalty for not paying in full is 0.5 percent of the unpaid balance per month with a maximum of 25 percent. The monthly penalty for not filing a tax return is 5 percent and capped at a maximum of 25 percent. For example, for someone who owes $1,000, the failure-to-pay penalty starts at just $5 per month, but the penalty for failing to file a return starts at $50 per month.
If a taxpayer can't pay their balance due all at once, they can request a short-term extension to pay, make an installment agreement or even pay with a credit card. In some instances, the taxpayer may qualify for an offer-in-compromise. By working with the IRS, taxpayers may reduce or eliminate their penalties.
Taxpayers can save time and money when they are short on both by talking to a tax professional about their options. A tax professional can help determine the best way to pay their tax bill in their unique situation. Today might be a good day to do that, but you could also take a nap instead.