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TWO MINUTE MONEY: What to do if you can't make the tax filing deadline

Welcome to Two Minute Money, Yahoo Finance’s new personal finance series offering quick explanations for some of the most important questions involving your money. 

You’ve got a lot going on, let’s be honest, doing your taxes probably isn’t your top priority. But what happens if Tax Day slips by and you still haven’t filed?

Step one, don’t panic. You’re not alone, and you’re not totally screwed. More than a million people missed the deadline for filing their 2015 taxes.

If you know ahead of time that you’re not going to make the deadline, the first thing you should do is file for an extension with the IRS and your state before the deadline. You’ll have to fill out a form with your name, Social Security number and give an estimate of how much you think you’ll owe in taxes. Once you do that, you’ll get an additional six months to file.

Different states have different requirements for extensions, so be sure to check your state’s rules. Several states don’t even have an income tax, so if you live in one of those, all you’ve got to do is take care of the federal extension.

If you don’t file your taxes or for an extension, you’ll be subject to a failure to file penalty of 5% of what you owe each month until you pay off the debt. Even if you can’t pay your taxes, file anyway. The federal penalty for not filing anything is 10 times higher than the penalty for not paying .

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But be careful, if you don’t pay up the IRS can file something called a tax lien that can attach to all of your assets (like a home or a car). A lien can also limit your ability to get credit and doesn’t go away if you declare bankruptcy.

There is no penalty for filing late if you’re getting money back. After all, you’re just letting the government hold onto your money longer. But don’t wait too long. You have four years to file taxes if you’re due a refund.

If you’re feeling anxious and have questions about your taxes, you can call the IRS for help. It sounds a little crazy, but trust us—they’ve heard and seen it all before.

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Do you have a question about your taxes? Email them to us at moneyquestions@yahoo.com

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