First Person: Late Tax Return? Here's What You Need to Know

When it comes to your tax return, it's good to plan for the unplanned, especially if you have not filed yet.

With the deadline a few days away, the last minute scrambling for expense receipts and late night sessions on the computer may still give way to the inevitable.

The Washington, D.C., holiday of Emancipation Day gives taxpayers the weekend to make an 11th-hour push to get their 1040s in by midnight April 18, but should the day come and go, what are the options? Here are five important details to bear in mind.

It may be too late to file for an extension

The IRS allows for an automatic six-month extension to file via Form 4868, but the form must be submitted by the due date of the tax return. The IRS will be accepting this form electronically through April 18. Once the due date passes, so does your ability to obtain an extension.

Keep in mind as well that an extension to file is just that -- an extension to submit the 1040 -- not an extension to make payment. The IRS still expects taxpayers to make timely payment on their estimated tax liability. If you can send in a payment to cover at least 90 percent of your anticipated tax balance, the IRS will not charge you a late payment penalty.

If you have a refund, then breathe easy

There are no filing penalties or negligence charges if you have a refund. By law, you have three years from the due date of the return to make a claim for your refund.

That being said, there are situations where the IRS may begin a return delinquency investigation if a return is not filed in a timely manner. The IRS can estimate any potential tax liability using documents reported by your payers, such as federal withholdings as shown on Form W-2.

However, large amounts of investment transactions may ultimately yield a loss on paper, but until you file a return to demonstrate those losses, the IRS will be looking for a return, and may even assess a tax balance in an effort to encourage you to file your own tax return.

Penalties and interest may be charged

There are two penalties that may be assessed, although neither can be charged until the actual return is filed and the tax is determined.

The Failure to File penalty accrues at five percent of the net tax due each month the return is late. The related Failure to Pay penalty is usually one-half of one percent of the net tax due. Both penalties max out when each one reaches 25 percent of the tax due.

For example, if a tax return is filed five months late with a tax balance of $750, the maximum Failure to File and Failure to Pay penalty would both be $187.50, for a total penalty charge of $375.

Interest is assessed as well on the tax, penalty and the interest. This compounded interest calculation is complex, but the combined penalty and interest charges can push the accrued statutory additions to well over 20 percent.

You can always amend your return

If your tax return is tardy because you are trying to squeeze out every last credit, deduction and write-off, then you may want to consider simplifying your return and amending it afterward.

Rather than putting off the filing of your return until well after the due date, send in your return now. Be sure to report all income sources, but save the lengthy credit and deduction computations until later. Choose the standard deduction in lieu of itemizing, for example. Pay any tax currently owed, and then later amend your return with Form 1040-X.

Can't pay? Still get your return in

Many taxpayers are unwilling to send in their tax return because they have an outstanding tax balance which they cannot make full-payment on. Doing so only creates time for potential penalty and interest charges to build up, and opens the door for a possible unreported income audit.

Send in your tax return as soon as you can with Form 9465, Installment Agreement Request. You can apply for monthly payments and if the IRS accepts the amount, you will have the option to pay with a credit or debit card, electronically through an automatic monthly debit from a checking account, or even through your employer as a payroll deduction.

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