Every year, the IRS grants taxpayers until April 15 to correctly file and pay their federal income taxes. People who cannot meet up with this deadline to file due to certain reasons can request an extension until October 15 by filling out and submitting IRS Form 4868. This extension will offer taxpayers additional time to file their returns. However, they must pay their expected amount of taxes by the April 15 deadline.
When the October deadline comes and goes, you might be wondering what the implications might be for not filing your taxes on time. You may decide to file your taxes by the original or extended deadline by acquiring knowledge on what could happen if you fail to submit your return by the October 15 deadline.
What happens if you are owed a Refund
If you were not able to file on both the April 15 and October 15 tax filing deadlines and are owed a refund, there are likely chances that nothing will happen to you. Instead, the IRS will more than likely take away any interest and penalties you owe from that refund. It is left to you then to file and claim that refund if you want it.
That is not to imply you should intentionally ignore filing your taxes, however. It is true that the IRS will not go out of its way to constantly remind you to file if it owes you a refund. It does not mind at all that you are lending it more money than you legally are required.
Still, you only have a period of three years to file your return if you want to collect on a refund owed to you. You also should file your next year’s return on time if you do not want the IRS to seize that tax refund as well. It solely depends on you to file the necessary return if you want to get the refund back to which is legally yours.
What If You Owe Money
If you miss the October 15 extended deadline and owe the IRS money, you place yourself at risk of getting into a graver situation. You are greatly advised to bear in mind that the IRS receives the same income statements as you do. It has access to statements like:
- 1099s
- 1098s
- W-2s
That confirms how much income you have earned during the year. The IRS also knows if you fail to file by the April 15 or October 15 deadline or if you have been offered an extension.
In addition, the IRS will pile up a substitute return for you and then inform you about how much taxes you owe to the federal government. This substitute return will not put into consideration any exemptions or deductions to which you are entitled. It is up to you to add that information on your return when you file.
As soon as the IRS compiles and informs you about the substitute return, it will commence collection activity against you immediately. These activities can include levying and seizing your assets including your;
- Retirement savings
- Bank account
- Real estate
- Life insurance policies
- Secondary car or home
You will get a notification in writing about the IRS’ intention to seize or levy your assets. You will be given up to 30 days to dispute the intention or resolve your debt in order to evade it. It is important that you do not ignore written notices from the IRS if you want to keep and safeguard the assets that you own.
Usually, you should file and pay your taxes as soon as possible after missing the October 15 deadline. If you avoid filing because you know you cannot pay what you owe, you may want to put the options available to you into consideration for resolving your IRS tax debt.
What If You Cannot Pay What You Owe?
When you realize you cannot pay what you owe to the IRS in one huge sum, you could take benefit of one of the payment options available to you. For instance, if you owe less than $25,000 in taxes and are current on filing your tax returns, you could qualify for the IRS Fresh Start Program.
This program offers you the chance to be set up on an installment agreement during which you will pay on what you owe over the period of several years. Your monthly payments will depend on how much you earn as well as how much you owe.
The payments will be set up to be within your budget so you can make them on time every month. You also will be needed to have the payments automatically withdrawn from your checking or savings account every month.
If an installment agreement is not within what you can afford right now, you could make a case for financial hardship. You could present proofs to the IRS that having pay your tax debt even in monthly increments would cause extreme financial hardships for you and your household. If you meet the requirements for financial hardship, the IRS will hold off on collecting what you owe at the moment.
You also could make an Offer in Compromise. This choice allows you make a realistic offer to settle your tax debt for a lesser amount. It must be based on your present income and the value of the equity in your liquid assets. If your OIC is approved, you can pay off what you owe for less than the real amount.
Finally, you could apply for penalty abatement. Abatement lets you to have the penalties and interest taken off your IRS tax debt. It makes it simpler for you to pay off what you owe.
More Time to File
In unusual instances, the IRS may grant you extra time to file and pay. This unusual extension after the October 15 deadline is set aside primarily for people in the military and taxpayers who live overseas.
These individuals could have an extension until December to file their tax returns. The extension is also reserved for military members who are serving in conflict zones.
The IRS offers taxpayers who apply and are approved for an extension until October 15 to file their returns. Taxpayers must pay their expected taxes by April 15 each year. You can avoid the dangers of penalties, interest, levies, and asset seizures by knowing the implications of missing the October 15 extended filing date.