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Filing after Tax Day: Penalties, Partial Payments and Credits

Tax day is typically the day when procrastinators pile into CPA offices and Post offices, desperate to get their returns in before midnight. What happens though, if you are unable to file or pay by the end of tax day? Well, there’s no need to panic. Truthfully, you can mail your return up to two days after tax day and are unlikely to incur any penalties. An IRS agent recently confessed in a radio news segment, that with the volume of returns coming in throughout the week after Tax day, there is no way for them to check post-dates on every envelope. Your slightly-late return would most-likely get mixed in with the torrents of mail, undiscovered.

If you are more than slightly late, however, then you will probably incur penalties on whatever you owe, in addition to late-filing penalties. The IRS suggests that you at least file on time, even if you cannot pay your tax bill, because it will save you from having to pay these additional penalties. If this is impossible, you can apply for a filing extension, using Form 4868 or Free File, to avoid some of the penalties. When it comes time to pay up, there are programs that will allow you to make payments on your tax debt, as well as options to offer a compromise on the amount. It is advisable that you pay whatever you can afford, as soon as possible, though, because the penalties will be based on how much you owe, and how late your payments are. Many tax professionals advise that if your payment is large you’re better off – and will pay less overall – taking out a line of credit to pay it than accruing the IRS interest and penalties, which could end up adding 25% to your bill.

If you are filing late and expecting a refund, then there are no penalties. In this instance, your main concern is probably credit eligibility. The truth is, you have 3 years to claim an Earned Income Credit. Many people who are eligible for this credit are not required to file, based on their income, but would benefit from filing late and claiming it. Additionally, credits such as the first time home buyer tax credit can be claimed even if you are filing late. Try to get your return in as soon as possible after the deadline, though, because what you accrue in penalties may negate any savings provided to you by credits.

In short, you will not go to jail for filing late, and it is not the end of the world. You may be inspired, though, to file ahead of time next year when you see just how much it could cost you.

Donna Smith is an online marketer and content specialist from Greensboro, North Carolina. She is a published anthropologist and lecturer, with a BA in Cultural Anthropology from UNC-Greensboro.

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