Federal tax-extension deadline today; Here’s what you need to do if you missed it

If you filed a tax extension for more time on your 2022 return, the federal tax-extension deadline of October 16 is here. This is the last chance to avoid late filing penalties, according to the International Revenue Services (IRS). However, some filers in disaster areas may have additional time.

Here’s what you need to know and do if you missed the deadline.

• Know IRS Late Penalties

If you miss the deadline, you could face two IRS penalties.


The first is the failure-to-file penalty, which amounts to 5% of unpaid taxes for each month or part of a month until you file your return, capped at 25%. In comparison, the second penalty is the failure-to-pay fee, which is 0.5% per month or partial month. Both penalties include interest. It's essential to file your return even if you can't pay your tax bill in full to avoid these penalties.

• Explore IRS Free File

Around 70% of taxpayers qualify for IRS Free File, but only 2% utilized it during the 2022 filing season, as reported by the National Taxpayer Advocate. To be eligible, you must have a 2022 adjusted gross income of $73,000 or less. However, Free File is only available through October 16 at 12 midnight ET, according to the IRS. It can be a great option for individuals with simple returns who don't require ongoing tax-planning advice and can benefit from the free service.

• Consider Funding SEP IRAs

For those who want to score a 2022 tax deduction before filing, Houston-based CFP Scott Bishop, managing director of Presidio Wealth Partners, as per CNBC report, suggested looking into simplified employee pension (SEP) individual retirement accounts (IRAs). While the deadline for most deductions has passed, self-employed, contract, or gig economy workers can still contribute to a SEP IRA. This not only helps your retirement plan but also provides a valuable tax deduction. You can establish a SEP IRA as late as your business's income tax return deadline, including extensions, according to the IRS.

• Get Organized

Financial advisers say that getting organized is the key to meeting the extension deadline. Highlighters, sticky labels, and manila folders can be your best friends in this process. Gathering your financial documents and ensuring you have all the necessary information is crucial to a smooth filing process.



FAQs:


What is IRS?

The IRS, or the Internal Revenue Service, is the United States government agency responsible for the collection and enforcement of federal taxes. It operates under the U.S. Department of the Treasury and plays a crucial role in administering and enforcing the Internal Revenue Code, which includes the federal tax laws.


Whom do we pay the tax?

Taxes are payments made by individuals and businesses to the government. These payments help fund various government services and programs. In the United States, federal taxes, including income taxes, are paid to the Internal Revenue Service (IRS), state taxes are remitted to state governments, and local taxes, like property taxes, are paid to local governments.

1. What is IRS?
   The IRS, or the Internal Revenue Service, is the United States government agency responsible for the collection and enforcement of federal taxes. It operates under the U.S. Department of the Treasury and plays a crucial role in administering and enforcing the Internal Revenue Code, which includes the federal tax laws.
2. Whom do we pay the tax?
   Taxes are payments made by individuals and businesses to the government. These payments help fund various government services and programs. In the United States, federal taxes, including income taxes, are paid to the Internal Revenue Service (IRS), state taxes are remitted to state governments, and local taxes, like property taxes, are paid to local governments.