This Is It! The Importance of the October Tax Deadline.

This is it! That is how many tax professionals think of this deadline.

As a final filing date, the October 15th U.S. tax deadline is important for several reasons.

1. It is your last chance to avoid late filing penalties.

2. It may be your last opportunity to claim a refund.

3. The IRS shuts down the eFiling system shortly after this date.

Most people are aware that April 15th is a major tax deadline in the U.S.

This is the date set by the Internal Revenue Service (IRS) for taxpayers to file their federal tax returns. Some business types with a K-1 requirement (i.e. Partnerships, S Corporations) have an earlier deadline and are required to file by March 15th. However, all individual taxpayers are required to file their taxes on April 15th. It is also true that when a taxpayer is not able to complete and file their taxes by this time, they are allowed to request an extension. This extension grants you until October 15th, that is six additional months, to file your tax return and avoid a late filing penalty.

So what are 3 key things you should know about the October 15th deadline?

1. October 15th is the last chance to avoid late filing penalties.

This is the final deadline for individuals who have been granted an extension to file. If you fail to file a tax return, owe taxes and do not have an approved extension, the IRS will assess a late filing penalty. The initial penalty can be as high as 5% of your tax bill. Over a period of time, interest will also be assessed causing your tax bill to increase if it remains unpaid.

The late filing penalty also applies to most state returns that are filed after this deadline.

2. October 15th may be your last chance to claim a refund.

If you expect a refund and you requested an extension by April 15th, you have 3 years from the extension due date to file and receive your refund. For example, your 2019 tax return was due April 15, 2020. If you requested an extension, that extended your time to file until October 15, 2020. Because you have a refund, there are no penalties for filing after that date. However, if you wait to file your 2019 tax return until after October 15, 2023 you will not receive that refund.

Even though you are technically due a refund, you will lose out on that money because you did not file within 3 years of the tax extension deadline. However, you would be able to claim a refund for any of the past due returns that are filed within the 3 year period.

3. The IRS shuts down the eFiling system shortly after October 15th to prepare for the next tax season.

This means that there may not be an opportunity to electronically file your taxes for several months once the system is shut down. The IRS needs time to prepare the system for the next filing season with the most recent tax law changes.

There is still an opportunity to send your tax return in by snail mail. However, the processing time may increase by an additional 8 to 12 weeks. Under certain circumstances, such as the pandemic, the processing time increased to over 6 months in some cases. In this situation, it would have been better to wait until the eFiling system opened up again at the start of the following tax season.

In summary, the October 15th tax deadline is important because it marks the final chance for those who have been granted extensions to file their federal income tax returns and avoid penalties, to receive refunds within the 3 year period, and allows you to eFile while the electronic filing system is active.