Tax return filing is something American citizens are not delaying this year. More people than last year’s tax season filed early. That is probably a sign of the fact that they may need money. Running out of money at this stage is not uncommon due to the exorbitant prices of food and other goods. If you do not have much time to file, you had better ask for an Internal Revenue Service -IRS- extension.
However, even if you have asked for an extension you must pay your taxes even if your tax return filing is delayed. Some people believe that the extension means paying taxes later, but that is not the case. Once more, make sure you do not file later than allowed. In this way, you can avoid penalties and fines. Another thing to aim for is to pay enough taxes, but not too much. If you get a big tax refund check, you may have paid too much. Getting close to zero should be your goal. By doing so, you can save and invest your money in order to save for retirement.
File your tax return before April 18 since that is the IRS deadline
It is true that more often than not filing takes place between January and April 15. So, this year you have three days extra. As April 15 2023 is on Saturday, they have decided to put it off until the next business day. But, there is another important day in Washington, D.C. April 17 will be Emancipation Day there so it has been pushed to April 18, 2023. Thus, dodging a late filing can help you get your tax refund faster. If you have to get a refund, the IRS will not be able to process it until you file your return.
Nevertheless, if the IRS does not owe you any money, but the other way around, you can be in trouble. In this case, you will have to face penalties. Owing money to the IRS and not filing your tax return could result in a 5% charge of the money you owe in taxes. It could be for a full month or part of it. The penalty could increase up to 25%. Bear in mind that the higher the amount you owe, the higher your debt will be. 5% of $100 is not the same as 5% of 5,000 dollars. If you owe the IRS $2,000 from 2022 and you pay one month later, your penalty will be 100 dollars.
How do I know if I owe the IRS the Failure to File Penalty?
Do not worry because the IRS will send you either a notice or a letter to let you know about it. It will only apply if you have not filed your tax return by the deadline. That is why it is so important to file before April 18 and get rid of this burden. In this way, you can save money on penalties and forget about it until next year. Even hiring a tax preparer can help you save money.
Think about it as if it were an investment. They will make the most of your tax refund check and you will not have to pay a fine or penalty. What is more, the IRS may charge interest on a penalty. This is something to avoid too at all costs. This interest makes the amount you owe bigger, and it will continue increasing until you pay for it. File and pay now and enjoy your tax refund in no more than 21 days if everything is fine.