What Can I Do if I Need to File My Taxes Late
April 13, 2015
In the U.S.?
For most service-based sole proprietors who are filing their Schedule C tax forms, April 15th is the deadline. April can be a busy month though, and lots of people find it tough to make that deadline. If you are concerned that you may not be able to make the April 15th deadline, you do have options. The first option is to file an extension using Form 4868.
This doesn’t excuse you from needing to make your tax payment by April 15th, but it gives you a six-month extension to file your paperwork. This allows you to pay either a portion of your tax bill, or what you estimate you will owe. Then, when you actually file, you’ll be credited for the amount you have already paid. You will still be charged interest on any outstanding amounts you don’t pay by April 15th though.
The other option is to simply file and pay late. This is not recommended though. You will get charged interest either way but the interest for paying late is higher than the interest for filing late.
You get charged 5% of unpaid taxes for each month you do not file. Compare that to the fee for paying late – ½ of 1% of unpaid taxes charged each month you don’t pay.
All in all you should attempt to properly file and pay your taxes by April 15th. If that isn’t possible though, you should know your options and make the best choice for your business.
For most service-based non-incorporated small business owners the deadline to file your taxes is June 15th, 2015 but the deadline to make your tax payment is April 30th, 2015. So even if you don’t file your paperwork, you still need to make a payment by April 30th – therefore, most people make April 30th their personal deadline.
If you file on time, but don’t make your full payment, you will be charged interest on the unpaid amount. The CRA charges 5% annual interest on the unpaid amount, but they apply it as compound daily interest.
If you don’t file your taxes on time you will also be charged. This fee is 5% of your balance owing, plus 1% of the balance for each month you do not file.
Since most service-based non-incorporated small business owners don’t need to file until after their payments are due, it generally is advisable to make a payment of what you estimate you will owe if you don’t think you’ll be able to do the paperwork before the end of April – if you waiting until June to figure it out you may end up with interest charges on top of your tax bill.
If circumstances beyond your control cause you to file late you can apply for relief from the fees. This is considered on a case-by-case basis and is intended as a tool in the event of emergencies. You can find Form RC4288 on the CRA’s website.