If you want to file a tax extension with the IRS, you need to do it by the April 15 deadline. Online tax software can also quickly calculate your estimated taxes. Taxpayers filing extensions must also include the estimated amount of money that they owe using IRS Form 1040-ES. Tax extensions provide taxpayers six additional months to complete their tax returns, but they must be filed by the tax deadline. Can I file an extension past the tax deadline? That rate is adjusted quarterly, and interest is compounded daily. Determined by adding 3% to the short-term federal interest rate, the IRS interest rate is currently 7%. The IRS also charges interest on late taxes. The IRS again charges the penalty for each month or part of a month that your payment is late, with a maximum 25% penalty total. This penalty is usually calculated at 0.5% of any taxes owed that aren't paid by the deadline. The failure-to-pay penalty will also cost you money, but not nearly as much - a big reason to file an extension on time even if you can't pay anything. If your return is more than 60 days late, the minimum penalty is $435 or the balance of your taxes due, if less than that. It's generally 5% of the amount you owe for each month or part of a month that your return is late, with a maximum penalty of 25%. The failure-to-file penalty hurts the most. On top of that, you'll also pay interest on the amount you owe. There are two basic penalties that the IRS charges for filing taxes late when you owe money: a failure-to-file penalty and a failure-to-pay penalty. What are the fees and penalties for filing taxes late? You'll also have to pay interest on the money that you owe until it's completely paid. If you miss the tax deadline, don't file an extension and you owe taxes, there's a good chance you will incur both late filing penalties and late payment penalties. What if I miss the deadline and I owe money on my taxes? Letting the IRS keep your tax refund longer only deprives you of possible interest and spending power. Whether you use your tax refund to pay down credit card debt, start an emergency fund, make investments or even just treat yourself to a nice dinner or vacation (depending on your refund amount), you want your money as soon as possible. You could be making good use of the money the IRS owes you, and the longer you wait to file your taxes, the more you lose out.
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