The IRS has issued a timely reminder for taxpayers: there is no need to wait until the October 15, 2024, deadline to file your 2023 tax return. Although some taxpayers have received an extension, it is crucial to remember that all taxes owed must be paid by April 15, 2024. Failure to do so could result in unpleasant penalties, particularly if you are operating on a tight budget. To avoid unnecessary stress and penalties, it is advisable to file your tax return as soon as possible.
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Average Tax Refunds: What to Expect
As of May 10, 2024, the IRS reported that the average tax refund stands at $2,869. This figure represents a 2% increase compared to the previous year. For those who opted for direct deposit, the average refund amount is slightly higher at $2,960, reflecting a 3.1% increase from 2023. Direct deposit remains a popular choice due to its convenience and speed, but some taxpayers still prefer receiving their refunds via paper check.
While many will benefit from a tax refund, others may face a significant tax liability. For those who struggle to cover their tax bill, it is essential to address the payment promptly to avoid accumulating debt and additional penalties.
Consequences of Failing to File on Time
If you have qualified for a filing extension, you have until October 15 to submit your tax return. However, if you miss this deadline, you could face penalties. The IRS imposes a failure-to-file penalty, which is calculated as a percentage of the taxes you did not pay on time.
Specifically, the penalty is 5% of the unpaid taxes for each month, or part of a month, that your return is late. This penalty can accumulate quickly, reaching a maximum of 25% of the unpaid taxes. In some cases, a failure-to-pay penalty might also be assessed, potentially leading to combined penalties. It is crucial to note that penalties can cap out, so timely payment and filing are essential to minimize additional costs.
Avoiding Penalties: File and Pay Early
To avoid the financial burden of penalties and interest, it is wise to file your tax return early, even if you have been granted an extension. Ensuring that all taxes owed are paid by April 15 will help you steer clear of unpleasant penalties and ensure a smoother tax season. By filing now, you can also benefit from early processing and potentially receive your refund sooner.
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Stay ahead of tax deadlines and avoid unnecessary penalties by filing your return as soon as possible. For more information on tax deadlines and payment options, visit the IRS website or consult a tax professional.