Happy Tuesday!

It’s that time of the year again. The second tax deadline has come. And if you’re one of the estimated 3,250,000 people that haven’t filed yet, you only have two more days to get it done.

My office has a substantial amount of clients that have yet to file (which is part of the reason that I was in the office over the weekend), but the second deadline never really gets as much hype as the first.

Despite the low fanfare, missing Wednesday’s deadline can mean significant penalties and interest.

Here’s what you need to know about missing the deadline:

Failure to File Penalty:

The most substantial penalty you face for missing the deadline is the failure to file penalty. As the name indicates, you incur the penalty for failing to file on time.  You can skirt the penalty with the first deadline by filing Form 4868 for an extension. Unfortunately, there’s no way to avoid this penalty if you miss the second deadline.

The failure to file penalty is 5 percent of the unpaid taxes for each month or part of a month that your return is late, up to 25% of the unpaid taxes.  If you file your return more than 60 days after the due date, the minimum penalty is the smaller of $135 or the unpaid tax.

Failure to Pay Penalty:

Along with the failure to file penalty, you will likely receive the failure to pay penalty. Again, the name is pretty self-explanatory: you incur this penalty for not paying your tax balance on time. The failure to pay penalty is ½ of 1 percent of your unpaid taxes for each month or part of a month you have not paid after the due date.

Like the failure to file penalty, this penalty can rise as high as 25% of your unpaid taxes. However, unlike the failure to file penalty, the failure to pay penalty isn’t avoided when you file an extension on the initial filing deadline. You have to pay at least 90% of your tax liability by the original April due date and the balance by the extension date, if you want to avoid the failure to pay penalty.

Some Things to Keep In Mind:

Penalties up to 25% of your tax balance are pretty serious.  So do your best to file and pay on time. You should keep a couple of other points in mind as well.

• The penalties only apply to people that owe: These penalties only apply to people that have a balance due on their return. If you’re entitled to a refund, you don’t have to worry about either penalty and just have to file your return within three years from the due date to receive your refund.
• Failure to file is much more than failure to pay penalty: At 5% a month, the failure to file penalty hits you much harder than the .5% a month penalty for failure to pay. So if worse comes to worse, make sure to file your return on time, even if you can’t pay the balance.
• Penalty Abatement: You can get these penalties abated if you can show that you had reasonable case for failing to file or pay on time and didn’t do so out of willful neglect. Especially if this is your first time owing, you have a good chance of getting the penalties waived. See Form 843 for more information.

If you’ve waited until the last minute to file your return, don’ worry; you’re not alone. Just don’t make the mistake of missing this second deadline and incurring penalties and interest on top of what you owe.