Tax procrastinators still have a little more than a week to file before the April 15 deadline. Extreme procrastinators? That's a different story.
Do you fear you maybe missed last year's deadline, or perhaps one from a few years earlier? If you do owe money from days gone by, don’t worry, millions do. But you can put an end to the penalties you've been accruing by starting the process right now.
Neglecting to file your taxes can cost you not just a lost refund, but also hundreds of dollars in fees. There are two types of fees that you will incur if you forget to file your taxes: A non-filing penalty and a non-paying penalty.
If the deadline approaches and you fail to contact Uncle Sam for an extension, expect to ratchet up a non-filing penalty fee of 5% of the amount due for each month that you are late. (The fee is not to exceed 25% in a year.) As soon as you file your belated forms, the fee stops increasing.
Next, delinquents owe a non-paying penalty, which is calculated based on interest for money owed. The interest rate for the non-paying penalty is revolving because this fee is based on federal short term interest rates which change each quarter. Unlike a loan, don’t expect to lock in interest rates. The current interest rate for this quarter is 6%, a change from the 7% interest rate in the year's first quarter.
If you believe you have missed a year, go to the Internal Revenue Service website, find the 1040 form for the appropriate year, and download the document. The forms change every year “due to inflation so the government is not overcharging you,” says Allan Boress, a self-employed CPA based in Eustis, Fla. If you do not make the first move to contact the IRS, the IRS will eventually contact you. While you do not get a discount for being proactive about your obligations, at least you stop incurring fees before you’re stuck with an astronomical penalty for late taxes. If you’re worried about fees, “sit down with a tax preparer” and figure out what you owe, says Boress.