You missed filing your taxes on time, so what do you do? The first step is to take a breath and not panic. There are still things you can do to rectify the situation. Here are five vital actions to take if you miss filing your taxes on time.
1- File As Soon As You Can
Life sometimes gets in the way and makes it possible to forget things, like filing taxes. If it was a simple oversight, file your taxes right away. The quickest way to get your payment to the IRS is to file electronically. Most e-filling services are available through the middle of October.
If you owe money, be prepared to pay a failure-to-file penalty. The penalty is approximately five percent of what you owe each month if you fail to file up to a maximum of 25%. If a refund is due, there is no penalty. The longer it takes to file, the longer it will take to get your money.
2- Make Known Your Special Situation
If you are filing due to a specific situation, the IRS does offer some grace. If you did not file because you were out of the country, you have until June. File for a four-month extension if more time is needed. You will avoid filing penalties, but you should still pay right away.
Situations the IRS may consider include health problems or an emergency causing you to travel. Communicating with the IRS is the best to avoid unwanted penalties.
3- Set Up a Payment Plan
One reason many people do not file taxes is because they own taxes. Holding off on filing will only cost you more money in the long run. Not only is the failure-to-file penalty tacked on to what you own, but there is a failure-to-pay penalty. The failure-to-pay penalty is considerably less than the late filing penalty. There are options if you do not have the total amount owed. The IRS offers several different payment plan options. You are still stuck with the penalties, but you do not have to worry about the IRS trying to collect the money in other ways.
4- Inquire About Penalty Relief
The IRS does offer penalty relief under a couple of circumstances. If this is your first time filing late, there is forgiveness for first-time offenders. You do not need to have paid the total amount due. It is necessary to note that the penalties will continue to add up on any unpaid amount. If you do not meet the requirements for the First Time Abate, the IRS does offer what they call Reasonable Cause Relief. The best way to find out what relief you qualify for is to contact the IRS.
5- Speak to a Tax Attorney
It is easy to feel overwhelmed in this situation. It may be time to reach out to a professional tax attorney. The tax attorney will communicate with the IRS on your behalf. They will help you to understand all the penalties. In some cases, they will have the capability to have the penalties reduced or eliminated. The lawyer will also assist in finding a payment solution that works for you. It is best to reach out to a tax lawyer right away.
