Who Can File Their Tax Return Late Without a Penalty?

Generally you have until April 15th to file your federal income tax return, unless you request an extension. If you file late you are subject to a late filing penalty. And if you owe tax you will also be subject to a late payment penalty. An extension to file is not an extension to pay. When you apply for an extension you should pay the amount of tax you expect to owe. If you owe more than that amount when you file your return, you may still be subject to a late payment penalty.

There are certain cases when you can file after the normal April 15th deadline, without incurring a penalty. These include reasonable cause, taxpayers abroad, taxpayers serving in a combat zone, and taxpayers in a disaster situation.

Reasonable cause

As indicated by Roy Lewis in an article on The Motley Fool website, the IRS may waive the penalty if you can show that you were given erroneous information by an IRS employee. You should keep records of phone calls, meetings or other correspondence to substantiate your claim. Erroneous advice from a tax practitioner may also constitute reasonable cause unless the advice you were given is contrary to a commonly known fact.

A serious illness may constitute reasonable cause for not filing a tax return on time. According to a U.S. Tax Court case cited by Kevin E. Reynolds, CPA, the illness must be incapacitating to the degree that the taxpayer was unable to file a return. In this case, the taxpayer would be expected to file the return as soon as he or she is able to continue conducting other business.

Taxpayers abroad

According to the IRS, if you are a U.S. citizen or resident and you are living and working outside the United States or Puerto Rico on the due date for filing your return, you are allowed an automatic 2-month extension to file your return. This also applies if you are in military or naval service and are stationed outside the United States or Puerto Rico. But if you owe tax, you will be charged interest from the normal due date (April 15) until you pay the tax.

To claim this automatic extension you need to attach a statement to your return when you file, explaining the situation that qualifies you for the extension.

Service in combat zone

If you are serving in a combat zone or in a contingency operation, you are allowed an automatic extension to file your return, pay any tax due, or file a claim for refund. This automatic extension applies to members of the Armed Forces, merchant marines, Red Cross personnel, accredited correspondents, and civilians under the direction of the Armed Forces.

The deadline is extended for at least 180 days after the last day you are in a combat zone or the last day of any continuous hospitalization for an injury you suffered in the combat zone. The 180 days are added to any time you had left to file your tax return when you entered the combat zone. For example if you entered the combat zone before January 1, the 3 ½ months you had to file your return (January 1 to April 15) are added to the 180 days.

Disasters

The IRS provides tax relief to taxpayers affected by a federally declared disaster, including an extension for filing tax returns. You can find news releases on recent Tax Relief in Disaster Situations on the IRS website.

Sources:
Kevin E. Reynolds, CPA, "What constitutes "reasonable cause" for late filing?" - Daszkal Bolton LLP
Publication 17 - Your Federal Income Tax - IRS
Publication 556 - Examination of Returns, Appeal Rights, and Claims for Refund - IRS
Roy Lewis, "Reasonable Cause" - The Motley Fool
Tax Relief in Disaster Situations - IRS
Tax Relief: Presidentially Declared Disaster Areas - IRS