Tax day is coming; but what if you can't file — or pay — your taxes on time?
The IRS said Friday that even with days to go until the deadline, about 50 million taxpayers have yet to file their tax returns. If you are among them, don't despair — there are options.
If you don't think you will be able to complete and file your taxes on time, request an extension.
Filing an extension helps taxpayers avoid penalties for a late return, according to the IRS. You can seek an extension through the IRS website, your tax preparation professional or most tax preparation software companies.
While an extension provides more time to file, it does not provide more time to pay any taxes owed.
The deadline to file individual tax returns and pay taxes owed is April 15 for most taxpayers. Because of area holidays, taxpayers who live in Maine or Massachusetts have until April 17.
Anyone can request an automatic tax-filing extension, but some people get extra time without asking, according to the IRS. Disaster victims, those serving in a combat zone and Americans living abroad automatically get more time to file.
Check the IRS website for specific dates but victims of certain federally declared disasters — such as last year's California wildfires, the Alaska earthquake or severe storms in several parts of the U.S. — are allowed to file later and avoid certain penalties. Military service members and eligible support personnel serving in a combat zone have at least 180 days after they leave the combat zone to file and pay. And U.S. citizens who live and work outside the U.S. and Puerto Rico have until June 17 to meet their tax obligation.
While it's important to heed deadlines, it's also critical not to rush when you file your taxes.
The IRS reminds taxpayers that mistakes can happen when hurrying to file a tax return. Errors can mean longer processing times and possible tax refund delays.
The best way to avoid common mistakes is to file electronically. The IRS estimates that about 70% of taxpayers can file their tax return at no charge by using the IRS Free File software. It also has electronic versions of its forms online for those that do not qualify for Free File.
PAY UP, EVENTUALLY
If you owe money to the IRS but can't afford to pay it at the moment, there's no need to panic, says Lisa Greene-Lewis, CPA and tax expert at TurboTax.
Contact the IRS to ask for an installment agreement when you file your taxes. If you qualify, an installment agreement will allow you to set up a monthly payment plan to pay your federal tax debt off over 6 years. If you're able to pay off your balance within 120 days, the installment plan won't cost you any additional fees.
If you file an extension but you choose not to pay what you owe by the tax deadline, the IRS will charge you a failure-to-pay penalty and interest on the taxes you owe them.
Contact the IRS to discuss your payment options at 1-800-829-1040. The agency may be able to provide other forms of relief to help you settle your debts. In some cases, the agency may be able to waive penalties. However, the agency is unable to waive interest charges which accrue on unpaid tax bills.
Do not ignore the problem as failure to file or pay federal taxes can lead to serious and expensive consequences.