At Extreme Investor Network, we understand the importance of staying on top of your financial obligations, especially when it comes to taxes. That’s why we want to provide you with valuable information to help you navigate the upcoming tax deadlines and make informed decisions for your financial future.
It’s no secret that tax season can be stressful, but with the right knowledge and planning, you can minimize the impact on your wallet. According to the IRS, about 19 million U.S. taxpayers requested an extension back in April, giving them until October 15 to file their 2023 federal income tax returns. However, for taxpayers in federally-declared disaster areas, the deadline may be extended even further, with new deadlines ranging from November 1 to as late as May 1, 2025, depending on their location. To find out if you qualify for an automatic federal extension, check the IRS database and reach out to your state for guidance on your state return.
It’s important to note that while filing extensions provide more time to submit your returns, they do not grant an extension for payment. If you owe taxes and fail to pay by the deadline, penalties can start adding up. The IRS imposes a late filing penalty of 5% of unpaid taxes per month or partial month, capped at 25%, as well as a late payment penalty of 0.5% of your unpaid balance per month or partial month, up to 25%. To avoid or limit these penalties, consider estimating what you owe and making payments toward that balance throughout the year.
If you find yourself unable to pay your tax bill in full, the IRS recommends applying for a payment plan. Short-term and long-term payment plans are available based on the amount you owe, but keep in mind that interest will continue to accrue on unpaid taxes. However, having an installment agreement in place may cut the failure-to-file penalty in half, providing some relief.
Looking ahead, it’s crucial to start planning for future tax obligations. With provisions in the 2017 Tax Cuts and Jobs Act set to expire at the end of 2025, higher tax rates could be on the horizon. Consider discussing capital gains acceleration or income shifting strategies with a financial advisor to prepare for potential changes. Additionally, adjusting your withholding or making estimated tax payments now can help prevent surprises come tax time next year.
At Extreme Investor Network, we are committed to helping you make smart financial decisions and navigate complex tax situations with confidence. Stay tuned for more expert advice on managing, growing, and protecting your money for the years ahead.