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According to the National Retail Federation, almost half of all consumers say they expect to file their taxes in February. Those who are expecting refunds often want to get their returns in early to maximize the chances of a quicker refund. If you know you’ll owe taxes, you might push off filing your refund until April so you have more time before you pay it, but what happens if you file your taxes late?
In This Piece:
- 1 in 4 People File Taxes Late
- Busy Lives Interfere With Filing Taxes on Time
- Older Generations Need More Help Filing Taxes
- Why You Should File Your Taxes on Time
- How Can I Make Sure I File Taxes on Time?
1 in 4 People File Taxes Late
We asked more than 1,000 people if they’d ever filed their tax returns late and followed up with a few questions about why someone might file taxes late. Just under 1 in 4 of survey respondents said they’d filed taxes late.
Our survey indicates that men are slightly more likely to file taxes late than women are. Around 25% of men in the survey said they’d filed taxes late before, while only around 20% of women said the same. Younger and middle-age individuals are also more likely to file taxes late than older generations. Around 46% of survey respondents aged 25 to 49 said they’d filed their taxes late at least once.
Busy Lives Interfere with Filing Taxes on Time
When asked what might cause them to file taxes late, 75% of people aged 18 to 49 said they just didn’t have enough time. Being too busy was the top reason given by people aged 18 to 34. Around 30% of men listed lack of time as a reason they might miss a tax deadline, making it the top answer for men. Only around 18% of women cited lack of time as a reason for failing to file taxes on time. For women, the most common reason was needing professional help with taxes.
Older Generations Need More Help Filing Taxes
For people aged 35 and older, requiring professional help with taxes was the top reason for filing late. This becomes even more common with each age bracket:
- Age 35-49: 25.5% said they need professional assistance filing taxes
- Age 50-64: 33.2% said they need professional assistance filing taxes
- Age 65+: 43.4% said they need professional assistance filing taxes
Aside from being busy and needing assistance, other reasons people gave for not filing taxes on time included:
- The costs of filing being too high
- Being too confused by taxes
- Forgetting when the deadline is
- Being unable to pay what’s owed
Why You Should File Your Taxes on Time
Filing your taxes on time is the law. It also keeps you from owing late filing fees and penalties.
What Is the Penalty for Filing Taxes Late?
The IRS charges steep penalties for failure to file your taxes. It’s 5% of the taxes due for every month the return is late—up to 25% of the taxes you owe.
However, in 2020, 2021 and 2022, if your taxes are more than 60 days late, the minimum filing penalty is $435 or 100% of the amount of taxes you owe, whichever is less.
What Happens If You Are Late Filing Your Taxes?
If you file your taxes late using a paid or free tax preparation software, it may help you calculate how much you owe in penalties. That amount will be included on the paperwork you generate showing you how much to pay. If that’s not the case and you file a return without calculating those amounts, the IRS is likely to send you a bill for the penalties.
Note that you’ll also owe interest on your total tax bill. The IRS charges interest on penalties and late taxes.
How Can I Make Sure I File Taxes on Time?
You can take a few steps to ensure you file your taxes on time, including:
- Filing for an extension. You can file an extension each year. If you file by the April tax deadline, the IRS automatically grants you an extension for 6 months, which can provide you more time to gather the documents you need or get help with taxes. However, the extension is for filing your return online, not paying what taxes you might owe. If you pay late, you may be charged interest.
- Preparing properly for tax season. Preparing well ahead of tax season can help you file on time. Keep your finances organized throughout the year. You might also have a folder to keep paperwork related to taxes–both physically and digitally.
- Getting professional help. Get help from tax preparers or accountants to file accurate tax returns on time. Reach out to professionals sooner in the tax season to ensure they aren’t booked up.
Better Late Than Never
If you owe taxes and miss the tax filing deadline, it’s better to file late than to continue to avoid the issue. Reach out to a tax professional if you’re not sure how to file your taxes or need help understanding if you can reduce your tax burden.
Methodology
This survey was conducted for Credit.com using Suzy. The sample consisted of a total of 1,035 responses per question and is not statistically representative of the general population. This survey was conducted in October 2022.
The post Survey: 1 in 4 File Taxes Late. Here’s Why You Shouldn’t Wait to File appeared first on Credit.com.
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