Taxes are done; now, what happens after April 18?

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ABRIL 27 2022

Takeaway Tax

The official deadline for tax filing passed a few days ago. However, if you have not filed a tax return, relax; it's not very late. However, you need to be quick and take action as soon as possible.

Let’s explore the actions you can take to avoid further losses and related implications for missing the deadline. This implication depends on whether you have applied for the extension or not.

So, if you have obtained an extension for filing a tax return, only Interest calculation on the estimated tax liability is applicable. On the contrary, if you have not obtained an extension, you'll be required to pay interest and penalty. Further, Interest and penalties keep accumulating on the liability until you finally file the return. Hence, appropriate tax planning and quick filing are the keys to success for appropriate tax preparation and tax management.

So. If you have not obtained a filing extension.

You will be required to pay the penalty and Interest as well on the amount due. It’s important to note that two types of penalties are applicable. The first one is about failure to file a tax return, and the second one is failing to pay the liability.

The amount for the first penalty is calculated by applying 5% on the undue amount each month, and the same rate is applicable for part of the month the return is late. However, the total penalty does not exceed 25% of the total tax liability.

Further, if failure to file and pay penalties are applied in the same month, the total amount of penalties is restricted to the penalty for failure to pay for that month. If you have not filed a return by the next five months of the due date, the penalty for failure to file will stop. However, the penalty for failure to pay will continue until its maximum limit, which is 25% of the unpaid taxes.

Similarly, if your return date is more than 60 days of the deadline, the minimum penalty for return filing will be lower of $435 and 100% of the tax shown in a tax return. Likewise, if the penalty is not paid on a timely basis, Interest is charged on the tax liability and penalty as well. Hence, efficient tax management is essential to ensure financial stability.


However, If you have obtained a timely extension.


You’ll only be required to pay Interest. Further, this extension is only applicable till October of the current year. There is no penalty in both of the above cases if you have a tax refund instead of tax liability. However, you will not be able to claim a refund if the tax return is not filed. These refundable credits include child tax credit, earned income tax credit, child and dependent tax credit etc. It's equally important to note that credits are lapsed if you do not file a tax return within three years by filing return.

However, if you missed the deadline line, there is no need to panic. At the same time, it does not mean that you should leave the matter and not take any action. Even if you do not have liquid funds to pay the tax liability, still we strongly recommend filing the tax return as soon as possible. So, there can be the least financial repercussions and things can be handled efficiently.

Further, if you have any problems in planning, calculating, and filing the tax return, we can offer extensive help to ensure things can be better planned and controlled. You can schedule one on one appointment with our TakeAway pro advisor to help you with the tax planning and control. You can also upload documents on the portal for our expert to review and recommend if there are some more documents required to smooth the process. We'll offer you complete support via screen share and help to enhance the overall process till you are satisfied.

We can also review taxes filed to see if there's a need for a correction or amendment. Our review will help identify errors/omissions and any mistakes in the filed return. Further, our TakeAway Tax portal is open all year long, not just during tax time to keep you on track until the following year. This can help save the tax and improve the overall process for record management, tax planning, tax filing, and other aspects of overall tax management.

It should be noted that documentation is one of the important aspects of adequate management. It’s extremely helpful in case your return is selected for the audit. It helps to prove tax treatment and compliance. In fact, it's only an option that can save you in case of a tax audit.



Conclusion

The deadline for tax filing was April 18. So, the deadline for filing has passed. However, if you have not filed a tax return as of now, three can be two situations. The penalty is not payable in the first case if you have obtained an extension. However, you'll be required to pay interest on the outstanding tax liability.

On the contrary, if you have not filed for the extension and missed a deadline, you’ll be required to pay the penalty and Interest on liability. So, the key to efficient tax management is to file your tax return as soon as possible. However, if you have any challenges in the process of planning, calculating, and filing a tax return, our experts can help you with the process. Even if you have filed your return, we can review and advice if there is something that can be improved.

Further, it should be noted that tax planning and filing is one of the important civic responsibilities that need to be complied with throughout the year. That’s why our services are not limited to yearly tax advice but ongoing help in terms of documentation, tax planning, tax compliance, and tax filing. Hence, Tax Takeaway can be a helpful resource where you get customized input from our tax consultant. Book one to one meeting with our advisor to discuss your customized circumstances and obtain professional tax service.


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