Missed The IRS Deadline? Take These Steps (And HURRY)
(DailyDig.com) – Missing an IRS filing deadline is a financially stressful realization. With so much going on in the new year, it’s hard to file taxes in January, and sometimes it slips until April. While the IRS does instill penalties for late tax payments, there are processes, procedures, and resources for late filers, especially if you’re willing to communicate with the IRS and are open to the possibility of a payment plan if you owe.
Will You Get a Penalty for Late Tax Filing?
That depends. if you’re receiving a tax refund, you don’t get a penalty at all! You have up to three years following the deadline to file. If you usually receive a refund or if you’re a low-income earner, it’s likely that filing taxes could get you money — not overburden you with a penalty.
However, if you owe taxes, you could face penalties. It’s better to do a late filing than to avoid paying taxes at all. The IRS may assess a 5 percent penalty per month once you’re late — and that starts with day one, so being a day late means automatically accruing that 5 percent in many instances.
Does the IRS Do Payment Plans?
Yes. The IRS’ current website is extremely user-friendly. You can make single payments towards your taxes and manage some aspects of your payment plan. We know the IRS as boogeymen from various types of media, but they greatly favor communications when it comes to making payments. Believe it or not, they might be willing to work with you in case you owe them.
Plus, if you owe but can pay it in 60-120 days, the IRS may offer you amnesty on that interest. Contact them to learn more.
How Can You Avoid Penalties for Late Taxes?
It’s easier than you think! If you think you are going to be late filing taxes, or if you have extenuating circumstances such as a death in the family, you should absolutely file for an extension. A tax extension will buy you more months — typically until the middle of October — before you have to turn your tax documents in. This will help you avoid any penalties.
Consult an Accountant
If you’re at risk of filing late, or if the filing deadline has already passed and you need to file, we recommend consulting with an accountant. A Certified Public Accountant (CPA) licensed to practice in your state can provide you with meaningful advice about your tax return — including whether you should expect a refund.
W-2s, 1099s, and Self-Employment
Taxes do get more complex all around when you throw in multiple types of filings. If you’re self-employed with an LLC, S-Corp, or sole proprietorship, your taxes could look a little different than the standard W-2 (full-time job / full-time employee) taxes. You’ll have to keep meticulous paperwork and different penalties and breaks may apply. That said, these processes are relatively common for most accountants — you’re likely not the first client they’ve seen who has been late on their taxes.
The IRS also offers the following reasons to file past due tax returns on their website:
- You can avoid penalties and interest;
- You can claim your refund if you file within three years of the deadline;
- Your self-employment contributions to your Social Security are at risk;
- You won’t get loans if you don’t rifle your tax returns — you need tax documents as proof of income for that.
For more information and direct assistance about where to file, see the IRS website about filing past due tax returns.
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