Tax extension deadline: What you need to know

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If you applied for an extension to file your taxes this year, the new deadline is rapidly approaching.

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Most taxpayers have until Monday, Oct. 16, to get all of their materials into the Internal Revenue Service (IRS) in order to meet the extended cutoff date.

Here are some tips and what to know if you miss the extended deadline to file.

Taxpayers affected by hurricanes, wildfires

Individuals living in areas affected by one of the major hurricanes or the massive wildfires in California could be eligible for a lengthier extension. The IRS considers the “affected” taxpayers to be those who reside in the covered disaster areas, those who have been working to provide relief or assistance in the disaster areas, or individuals who visited the affected area and were injured as a result of the disaster. The IRS has specific guidelines listed for individuals to determine whether they are entitled to more time.

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What happens if you don’t file in time?

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If you miss the tax deadline, it is in your best interest to file as soon as possible thereafter to avoid major fines and penalties.

In theory, people who filed for an extension still were supposed to have paid 90% of dues to the IRS back in April.

If taxpayers didn’t pay enough in April and they miss the extension to file, they will owe both penalties and interest, Tim Speiss, partner at EisnerAmper Wealth Planning LLC, told FOX Business.

A penalty for filing late is 5% of the amount of unpaid taxes each month, up to a maximum of 25%. The penalty for paying late is 0.5% of the amount you owe each month up to a maximum of 25%. If both penalties are due in the same month, the failure to file penalty is reduced to 0.5%.

Starting last year, the State Department can also revoke the passport of a U.S. citizen who owes more than $50,000 in back taxes, Speiss pointed out.

Trump’s tax and health care reform

The Trump administration has proposed major changes to both the tax code and the health care law that could, if approved by Congress, impact taxpayers moving forward.

On Thursday, President Donald Trump ended cost-sharing reduction subsidy payments to insurers, which, if left unchanged by Congress, could lead to people paying more out of pocket, “which goes right through the tax returns,” Speiss said.

“When you talk about things that may not be deductible, health care costs may be among the top,” he said.

But tax reform also could bring some changes in the form of carried interest, investment expenses and state and local tax deductions, Speiss pointed out, noting this will ultimately depend on Congress passing the legislation.

Speiss recommends speaking with a qualified professional about how your income and deduction patterns could change moving forward.

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