The IRS is reminding taxpayers who haven’t filed their 2023 tax returns to act before the October 15, 2024 deadline. While some individuals qualified for an extension, it’s crucial to file your return as soon as possible to avoid penalties. If you’ve already received an extension, remember that you were still required to pay any taxes owed by April 15, 2024. Delaying your filing could lead to penalties that only worsen the financial burden.
Tax Refund
As of May 10, 2024, the IRS reported that the average tax refund is $2,869, which marks an increase of about 2% compared to 2023. Many taxpayers chose direct deposit, with the average refund for direct deposits being $2,960, an increase of 3.1% from the previous year. While receiving a refund is a welcome relief for many, others may face a different outcome: paying taxes owed rather than receiving money back.
Refund Statistics:
| Refund Type | Average Amount (2024) | Percentage Increase from 2023 |
|---|---|---|
| Total Refund | $2,869 | 2% |
| Direct Deposit | $2,960 | 3.1% |
Not Filing on Time
While some taxpayers are fortunate enough to receive refunds, others may face the unpleasant reality of owing money to the IRS. Failing to pay taxes owed can lead to penalties and even IRS debt, which becomes increasingly difficult to manage the longer it goes unpaid.
If you don’t file by the October 15, 2024 extension deadline, you could be subject to the failure to file penalty. This penalty is 5% of the unpaid taxes for each month (or part of a month) that your return is late, up to 25% of the unpaid tax amount. On top of that, you could also face a failure to pay penalty, which further increases your liability.
Failure to File Penalty:
| Delay Period | Penalty Rate (%) per Month | Maximum Penalty (%) |
|---|---|---|
| 1-5 months | 5% per month | 25% of unpaid taxes |
The more you delay, the higher the penalties can go, which could max out at 25% of your owed taxes. This makes it essential to either file your return or reach out to the IRS to discuss payment options if you’re struggling to pay what you owe.
Avoiding Penalties
While missing the April 15 payment deadline already puts you at risk for penalties, you can still avoid further consequences by filing before the October 15 deadline. Filing on time, even if you can’t pay the full amount, helps minimize the penalties you face. Additionally, setting up a payment plan with the IRS can help you avoid the compounding costs of unpaid taxes.
Filing Now is Critical
Filing your tax return sooner rather than later allows you to avoid further penalties and financial strain. Waiting until the last minute not only increases your stress but also opens the door to unnecessary fees. The IRS provides resources and payment plans for those unable to pay their taxes in full, so it’s always better to take action.
Whether you’re expecting a refund or facing a tax liability, staying on top of your tax obligations can prevent financial headaches. Filing on time, even after an extension, is critical to managing your finances responsibly.
FAQs
What is the extension deadline for the 2023 tax return?
The deadline is October 15, 2024.
How much is the average tax refund in 2024?
The average refund is $2,869, with direct deposits averaging $2,960.
What is the failure to file penalty?
The penalty is 5% of unpaid taxes for each month, maxing out at 25%.
What happens if I miss the extension deadline?
You may face penalties that increase the longer you delay filing.
Can I set up a payment plan if I owe taxes?
Yes, the IRS offers payment plans to help manage tax liabilities.
