Most taxpayers and to our surprise many tax preparers have been made to believe, if you don’t file your tax return by April 15th, “tax day” the IRS boogeyman will come hunt you down… That’s not entirely true.
This idea is such a concern, we have received a huge number calls from panicked tax preparer’s worried their clients are going to have issues by not meeting the April 15th “deadline.”
Keep reading and we will let you in on a non “secret”.
If your client is getting a refund, there is no such thing as late!
Every filing season 3 out of 4 or 75% taxpayers get a refund! Between us…. don’t go blabbing to all your clients, but… If your client is getting a refund, there is no penalty for filing after April 15th. FYI… they don’t even need to be on extension! The government will gladly hold on to their refund for as long as they delay, on an interest free basis!
Current year e-file has traditionally stayed open until late November, at which point the IRS cuts it off in preparation for the upcoming tax season. In fact, you can still process these “late” returns with a bank product through late October, at which point the bank closes in preparation for the upcoming season.
In summary, there are millions of taxpayers getting refunds that still haven’t filed! Go get them!
If your client has a balance due… That’s a different story.
If your client has not paid their entire balance of tax owed by April 15, 2019, they will owe a late payment penalty of 0.5 percent per month until the balance is satisfied. This goes for clients that are on extension as well.
If your client has not paid their entire balance and is not on extension, they will be assessed the late filing penalty of 0.5 percent of the outstanding balance per month, plus interest. Late filing penalties have a cap of 25 percent of the outstanding tax balance.
What they owe the IRS but can’t pay?
If your client has a balance due but can’t afford to pay, there are a few options available to them. Your client can always file their return and wait for a bill in the mail, which is most certainly going to have some interest and penalties charges. They can pay the balance on a credit card, enter into an installment agreements or work out an “offer in compromise.” If you have ever suffered from insomnia and watch late night T.V., you have probably seen there is an entire industry that makes an absolute fortune working with clients who can’t pay…something to look into if you ask us!