Late US Tax Filers Face Higher Interest Rates and Renewed Penalties
Millions of Americans are racing to file their 2021 federal taxes before time runs out.
The 19 million taxpayers who requested an extension on the April deadline have until Oct. 17 — because Oct. 15 falls on a Saturday — to submit their documents, leading to a mad dash for tax professionals and accountants as the due date approaches.
After two years of leniency due to pandemic-related chaos, the Internal Revenue Service is back to imposing fines on those who miss the deadline. Plus, the interest rate for underpayments increased to 6% on Oct. 1, up from 5%, so it’s now going to cost you even more if you haven’t paid everything you owe.
It’s all adding up to a much different tax environment than last year.
“I’ve seen an uptick in people now treating Oct. 15 like the new April 15,” said Elliot Pepper, a financial planner and director of tax at Northbrook Financial in Baltimore. “The extension came in as a popular tool for people to kick the can down the road a bit and give themselves more time.”
For those who haven’t filed their taxes yet, there’s still time, but the clock is ticking. Financial pros have some tips for navigating this year’s extension season, as well as some general advice for making taxes as painless as possible.