When you file your return after the April 15 deadline, the IRS can start charging you penalties on the first day your return is late if you owe tax. If April 15 ever falls on a weekend or holiday, then it is due on the next business day. For example, the IRS requires you to file a 2010 return by April 18, 2011 since the District of Columbia celebrates Emancipation Day on April 15, 2011.
Return Reports Refund
The IRS never imposes a penalty when you file a tax return that reports a refund due to you. This is because penalties are charged as a percentage of the tax you still owe on April 15. When you are due a tax refund, this means you paid sufficient tax during the year. However, if you file your return late, you will be delaying receipt of your refund.
Filing your tax return late when you owe tax is when you run into problems that can start costing you money. The IRS will charge you a monthly 4.5-percent late-filing penalty until you file the return, for a maximum of five months. However, you will also accrue a monthly penalty of 0.5 percent for each month you are late paying the tax you owe. Once you reach the maximum late-filing penalty, this can accrue for a little more than four years on your unpaid tax debt.
Exceptions to Penalty
The IRS does realize that circumstances beyond your control may prevent you from filing by the deadline. In these rare cases, you will not be subject to penalties, though you have the burden of convincing the IRS that you had reasonable cause for missing the deadline. Once you receive a bill from the IRS that includes penalties, you need to draft an explanation and request that it waive all penalties. Under no circumstances will the IRS waive penalties if missing the deadline is due to your own neglect. For example, requesting a waiver because you were vacationing out of the country on the deadline is not reasonable cause; however, living in an area affected by a hurricane on April 15 will likely get you a waiver.
There is really no reason to accrue a late-filing penalty, since the IRS offers most taxpayers an automatic six-month extension of deadline to file. To receive the extension, all you need to do is submit Form 4868 to the IRS by the original tax return deadline. If you make a tax payment with a credit card by the deadline, then your payment serves as your extension and a Form 4868 is not necessary. Keep in mind that although an extension prevents you from incurring late-filing penalties, you are still subject to interest charges and late-payment penalties if you fail to pay your tax in full by the original April 15 deadline.