Nobody wants to get in trouble with the IRS and other tax authorities by missing the year’s tax filing deadlines. Not filing your tax return has dire consequences, and the tax agency may levy some nasty penalties against you for this. It’s important that you act fast to prevent your problem from becoming bigger. Continue reading for information about what to do if you’ve missed a tax deadline.
File Your Tax Return Immediately
If the tax deadline has passed, you should file immediately, regardless of whether you have a tax bill. You are better off filing your returns than assuming the Internal Revenue Service will forget about you. Submitting your returns is the only way to claim back any money you have overpaid to the IRS and get any credits or deductions you qualify for.
If you fail to file your returns, the IRS can impose fines, penalties, liens, and more financial consequences. If you owe money, you’ll likely incur a Failure to File Penalty, which is usually 5% of your unpaid tax bill for each month you’re late, up to 25%. If you are due a refund, you will not incur a penalty, but you may lose the ability to collect that refund over time.
In the event that you still don’t file a return even after fines and penalties, the IRS will likely create a substitute return for you. They will use all their information, including 1099s and W-2s filed by different vendors and employers, to create a tax return for you and send you the bill. Remember that substitute returns do not have lots of credits and deductions, and they result in higher tax bills compared to what will be produced by the normal tax return.
Claim a Free Extension
If you need additional time to put your calculations together, you can file Form 4868 for a six-month extension. It’s important to note that this extension is only for the paperwork and not an extension to pay later. When you fill out this form and owe money, you need to have a rough estimate of your tax bill for that year and send payment when you submit the form. You do not need an accurate number. If you are in doubt, always go higher instead of going low. Even if you pay more than what you owe, you will get a refund of the excess money paid.
Make the IRS an Offer if Unable to Pay
Many people will avoid filing taxes if they know they cannot afford to pay the tax bill. However, if the inability to pay is your concern, you should still file taxes immediately. You can set up a payment installment plan with the IRS, which will restrict the penalties, fees, and interests you will be hit with. An installment agreement with the tax agency allows you to pay your taxes over time while minimizing the strain on your finances. The eligibility of a payment plan will depend on your tax liability and individual situation. If you can pay your taxes within 180 days, that is a short-term payment plan. In contrast, long-term plans may be set up monthly and involve direct debits from your bank account. You can apply for a payment plan with the IRS by phone, online, mail, or in person.
Get Professional Tax Filing Help
As a taxpayer, you have different options you can consider if you miss filing your return. You need to act as quickly as possible because the longer you wait to determine your game plan, the more costly the fees and penalties will be. It is wise to hire a seasoned tax preparer to assist you in preparing and filing your late return. An experienced tax professional will match you up with some great tax breaks you would never have discovered on your own and can prove invaluable when preparing a payment plan with the IRS.