Forgot or put off your tax return? Here’s what you need to know.
It’s going to be ok. Or at least if you take care of it now, it’s going to be better than it will be if you keep avoiding filing your return.
There are penalties if you fail to file and pay by April 15th. There are also penalties for failing to pay by the April 15th deadline. The penalties can start out somewhat minor but they can quickly escalate into very costly penalties once several penalties accumulate. Also, if you do not respond to the IRS’s attempts to collect on what you owe, they can take out a lien which negatively impacts your credit. You can also have your wages garnished.
So to avoid the above mentioned penalties, here’s what you need to do to get this handled.
There is a 5% interest rate that gets tacked on per month for failing to file your return and that caps out at 25%. That’s a lot of money to unnecessarily pay when filing can be rather painless in comparison to the cost of the penalty.
Failing to pay your amount owed is .05% per month and that caps out (although slower) at 25%.
However, if you exceed 60 days in filing, the penalty is no less than $135 or 100% of the balance due—whichever one is less.
File even if you can’t pay now.
The penalty for filing is much greater than the penalty for not paying right away. A payment arrangement can be set up with the IRS for paying taxes you owe.
Use a tax professional.
Using a tax professional like us can find ways to bring down your taxable income in ways you may not know about. This will help take the bite out of the penalties.