Image by: Kelly Sikkema
April 15th is a date known by many American taxpayers as tax day. Over the past few years tax day hasn't fallen on April 15th. Thanks, coronavirus! The changing of the deadline has caused confusion among some taxpayers, causing them to file late.
It is important to understand why your tax filing is due as well as when to make payments. Failure to file your personal return on time can result in a 25% increase in your tax bill. Let's take a look at when your tax filing and payments are due and how you can get extra time to file if you need it.
When are individual taxes due?
The IRS due date for filing your tax return is typically April 15th each year. It has been this day since the ratification of the 16th amendment in 1913. However, if this date falls on a weekend or holiday the IRS pushes it to the next business day. Tax day for 2023 is April 18th, 2023. Not only is your tax return due on this date, but if you have a balance it is also due on this date.
If you cannot pay the balance in full on tax day you should still file your return on time. One of the biggest mistakes that I see people make is to see that they have a balance and not file their tax returns. Filing to file your tax return by the due date when you have a balance will result in a failure to file penalty. This penalty is 5% of the balance due for each month it is not filed. The maximum penalty is 25%. The minimum penalty for a return filed 60 days or later is $435 unless the amount of tax is less than that. If the amount of tax is less than $435 the penalty is 100% of the tax shown on the return.
When are business taxes due?
Sole proprietors (this includes single-member LLCs) still have a due date of April 15th. This is because sole proprietors file their business information on Schedule C of their 1040. If the 15th is on a weekend or holiday the filing deadline for these returns is also moved to the next business day. Corporations also have an April 15th due date.
However, Partnerships and S-Corporations have a March 15th deadline. The penalty for filing a partnership or s-corporation return late is $220 for each month it is late. Then the IRS multiplies that by the number of partners there are. The maximum amount of months considered for this penalty is 12.
Let's say Tripletts LLC has 3 partners and files their return 6 months late. They would have a failure to file tax penalty of $3,960. This is $220 x 6 months x 3 partners.
The table below shows the tax filing due dates for 2023.
Tax Form | Tax Filing Due Date |
1040 -Individual Tax Return | April 18th, 2023 |
1065 - Partnership Tax Return | March 15th, 2023 |
1120 - Corporation Tax Return | April 18th, 2023 |
1120S - S-Corporation Tax Return | March 15th, 2023 |
When are tax payments due?
Uncle Sam wants his money when you earn it. The United States has a pay-as-you-go tax system. You may be all too familiar with this if you have a W-2 job. Your employer withholds taxes from each check and pays the taxes on your behalf. There are times when a taxpayer must make these payments on their own.
The IRS calls these payments estimated tax payments. Taxpayers that qualify, make estimated tax payments once a quarter. If you have income that is not subject to withholding such as self-employment income you need to make estimated tax payments. You can find out more about these on my podcast, Tax Relief with Timalyn Bowens, or my YouTube Channel.
The IRS requires individuals that anticipate having a tax liability of $1,000 or more to make estimated tax payments. The threshold is lower for corporations and is only $500. There are no estimated federal tax payments for partnership or s-corporation returns because they are not taxed at the federal level.
Any tax balance is due on the date your tax filing is due. If you cannot pay the balance in full you may be subject to the failure to pay penalty. This penalty isn't as crucial as the failure to file penalty. It is only 1/2 of a percent for each month the balance remains. Nevertheless, it is a penalty all the same.
If your tax liability is not paid throughout the year the IRS may assess you for an underpayment penalty. You can avoid this by paying 100% of your prior year's liability or 90% of the current year's liability by the tax due date.
For individuals, you can figure out what this amount is by using Form 1040-ES for estimated tax payments.
What if I cannot file taxes on time?
If you are unable to file your tax return on time you can request an extension of time to file. This extension will give you an additional 6 months to file your return but not to pay. To request this extension for individual returns you can use Form 4868. You can file it online or by mail.
To request an extension of time to file a partnership, s-corp, or corporation return you will use Form 7004. You can also file this form online or by mail. Even though you have requested more time to file your tax return the payment is still due by the original filing deadline.
If you can't pay in full there are options. You may qualify for a Guaranteed Installment Agreement if your balance is less than $10,000 and you meet other criteria. If not, there are other payment arrangement options that may suit you better.
To learn more about IRS payment plans aka installment agreements check out episode 10 of Tax Relief with Timalyn Bowens. I break down how to qualify and set one up. Listen as soon as possible if you can't pay your tax liability in full because back taxes shouldn't ruin your life.
Timalyn S. Bowens EA is America's Favorite EA and Tax Expert who will work hard to find a customized legal solution for you! As an Enrolled Agent licensed through the Internal Revenue Service Timalyn is able to fight the IRS for taxpayers in all 50 states. As the host of Tax Relief with Timalyn Bowens and a YouTube content creator she empowers taxpayers to make educated decisions about their tax situation.
When you are facing questions regarding your personal or business taxes, working with a professional makes all the difference. At Bowens Tax Solutions, we serve our Louisville-area neighbors by providing the tax services and knowledge needed to succeed. We are here to assist you with your tax issues and preventative care. Visit our website at www.bowenstaxsolutions.com for more information..