ACT NOW- 2017 TAX TIME IS NEAR! The 2017 deadline for your U.S. income taxes is April 17, 2018 – ONLY 9 DAYS LEFT!
The truth is a bit more complex. There are different rules that apply to those who live in the U.S. and those that live abroad. Also, you need to distinguish between paying your taxes and filing your tax returns.
Let’s get started…
|Pay tax due without interest or penalties||April 17|
|File tax returns (with automatic extension)||June 15|
|File tax returns if applied for extension||October 15|
You must file your tax returns or apply for an extension by April 17 but those living abroad have an automatic extension to file until June 15. This extension is different than the “applied for” extension through October 15.
If you applied for an extension by April 17, you must file your tax returns by October 15.
Penalties for failure to timely file (including extensions), generally are 5.0% of net tax amount due per month, subject to a cap.
Pay Taxes: You need to pay your Federal and State taxes by April 17.
If you do not pay your taxes (or more) by that date you will likely owe interest and penalties. These can be substantial (for instance, penalties for failure to timely pay, generally are 0.5% of net tax amount due per month, subject to a cap). It can also affect the amount that your employer will withhold from your wages in future years.
You need to pay your taxes even if you do not file your tax returns by April 17. But wait, how do I know how much tax I owe if I haven’t done my return yet?
It does sound odd that you must pay your taxes before you’ve done the final tax calculation. Nonetheless, it is true. The IRS and the State expect you to either (1) have your return done by April 17 or (2) estimate your taxes due and pay your taxes based on your estimate.
If you estimate, you should estimate you owe the higher amount of tax. Otherwise, if it ends up that you underpaid your taxes, you will likely incur interest and penalties. In our opinion, you are always better off overpaying your taxes (thus avoiding interest and penalties) and file for a refund rather than underpaying and owing interest and penalties.
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