Tax deadlines can be a major source of stress for many small business owners. The complexity of the tax code, coupled with the everyday duties of running a business, can make it challenging to file on time. However, missing the deadline can lead to serious consequences, including penalties and interest charges.
Learn what to do if you miss the tax deadline, how to minimize the damage, and how Ceterus can help you.
Filing Vs. Paying Taxes
First, let’s discuss the difference between filing and paying taxes. Filing taxes refers to the process of submitting your annual tax paperwork to the IRS, detailing your income, deductions, and credits for the year. Paying taxes, on the other hand, is the act of actually sending the money you owe in taxes to the IRS.
The penalties for late filing are typically more severe than those for late payment. If you’re due a refund, there’s no penalty for late filing, but you have up to three years to claim it. If you owe taxes and miss the deadline, you could face penalties, but these can be alleviated by filing as soon as possible.
Consequences of Missing the Tax Deadline
IRS deadlines are no joke. If you miss the deadline for filing your tax return, you may have to pay a failure-to-file penalty for not filing on time. The penalty is typically 5% of the unpaid taxes for every month or part of a month that your tax return is late. It starts adding up the day after the tax filing due date and can’t be more than 25% of the taxes you owe.
Meanwhile, the failure-to-pay penalty is 0.5% per month of the unpaid tax, also maxing out at 25% of the amount due.
It’s important to note that the failure-to-file penalty is generally more than the failure-to-pay penalty. So, if you can’t pay all the taxes you owe, you should still file your tax return on time and pay as much as you can to keep this penalty to a minimum.
Key Tax Deadlines
Knowing when to file is crucial for avoiding penalties. Here are some key tax deadlines for 2024:
- March 15, 2024: Deadline for partnerships, S corporations, or LLCs taxed as partnerships to file business tax returns. Deadline to file Form 2553 for S corporation election for tax year 2023.
- April 15, 2024: This deadline date for C corporation tax returns, personal returns, and extensions filed (if necessary).
- September 16, 2024: Deadline for partnership or S corporation return if extension was requested.
- October 15, 2024: Deadline for sole proprietorships corporate return if an extension was requested.
Coping With Late Filing And Payment
While late filing and payment penalties can be steep, they are not insurmountable. If you’ve missed the tax deadline, there are steps you can take to mitigate the situation:
- File Your Return: If you can’t file by the deadline, submit your return anyway to reduce the failure-to-file penalty.
- Pay As Much As You Can: If you can’t pay your tax bill in full, pay as much as possible to reduce the interest and penalties you’ll owe.
- Start A Payment Plan: The IRS offers payment plans for those who can’t pay their tax bill in full. These plans allow you to pay what you owe in monthly installments.
- Look Into the Offer In Compromise Program: Consider applying for an offer in compromise (OIC) program or requesting a temporary delay in collection. This program allows taxpayers to settle their tax debt for an amount less than what they owe if they can prove financial hardship.
- Ask For A Temporary Delay: To request a temporary delay, provide the IRS with information about your income, expenses, and assets, and they may grant a temporary delay if you’re unable to pay.
Never Miss A Tax Deadline Again
Knowing tax deadlines and last-minute filing tips can be useful, but year-round tax planning is the best way to prevent tax season stress. This means regularly reviewing your finances, keeping your records up to date, and understanding how your business decisions affect your taxes.
At Ceterus, we’re here to provide clear financial insights, tech-enabled bookkeeping, and tax preparation, helping small business owners like you build a stronger future.
With us as your bookkeeping and tax solution, you can expect:
- Year-round tax planning at no additional cost
- Our bookkeeping and tax teams work together to ensure accurate, on-time filings – covering all tax obligations, such as federal, state, sales and personal property tax
- A clear financial picture of your business with our comprehensive tax strategy
Don’t deal with the tax deadline alone. Contact an expert at Ceterus today.
