Commonly known as Tax Day, income taxes have to be filed by April 15th at the latest. This was extended last year, but it stands at April 15th again for this year’s income — to be filed in 2022.
But what if you make a mistake and just miss the deadline? Say you fill out all the paperwork correctly and just don’t get it sent in on time, or maybe you didn’t realize that the extension that you got in 2021 wasn’t going to be applied a second year in a row. You’re not trying to avoid paying your taxes, but is that how the IRS sees it?
There are financial penalties
First off, the IRS is not just going to assume that you’re not planning to pay taxes if they come in late. This isn’t an example of tax evasion or fraud. It’s important to note that because a lot of people grow concerned about these very serious allegations over the smallest mistakes, such as a missed deadline.
In reality, you’ll probably have to pay a late fee. The maximum is 25%, but it’s more common to be charged half a percent every month. So, your taxes may be a bit higher if you miss that deadline, but the IRS is not going to take drastic action — unless they believe it is intentional fraud.
That said, even these penalties can be massive for some business owners. If your company made millions in revenue this year and now you’re looking at fines for late payment of your taxes, it can be incredibly problematic. The amount owed could be so much that it starts to wipe out your earnings for the quarter. Make sure you understand how to apply for extensions and all of the other potential legal options at your disposal.