April 15 is the tax deadline and the Internal Revenue Service (IRS) is grappling with a deluge of tax filings, already receiving over 90 million returns and processing more than 88 million, as per the latest data. The IRS says this tax season will witness more than 128.7 million filings.
Early insights into tax data reveal that Americans are experiencing larger refunds this year, largely attributed to adjustments made by the IRS to counteract inflation. Notably, the tax agency boosted tax brackets and standard deductions by 7% for 2023 tax returns.
For those scrambling to meet the impending tax deadline, here’s a breakdown of essential information, including options for filing extensions and common tax relief exceptions.
Tax Deadline Basics:
When are taxes due?
Tax Day, the annual tax filing deadline is April 15.
Are there exceptions?
Yes, the IRS grants later filing deadlines for certain categories of taxpayers, including overseas residents and individuals affected by disasters. Victims of storms, flooding, wildfires, and other calamities in designated areas may be eligible for extended filing deadlines.
Filing for an Extension:
If additional time is needed to complete tax filings, taxpayers have until April 15 to request an automatic six-month extension.
This extension can be sought through the IRS’s Free File tool or by submitting Form 4868.
However, it’s crucial to note that extensions only prolong the filing deadline, not the payment deadline. Taxpayers owing taxes should estimate their tax liability and pay as much as possible by the deadline to avoid penalties.
Implications of an Extension :
Extending the filing deadline does not defer tax payments owed to the IRS. Taxpayers are required to estimate and pay at least 90% of their tax liability by the deadline to avoid penalties and interest charges. Failure to meet payment obligations may result in late-payment penalties, accruing at a rate of 0.5% per month of the outstanding tax amount, with a maximum penalty of 25%.
Additionally, late-filing penalties may be imposed if returns are filed after the due date, with penalties ranging from 5% of the amount due per month or partial month of delay, with a minimum penalty of $450 or 100% of the unpaid tax, whichever is less, for returns filed over 60 days late.