When people realize that they have not filed the taxed and have missed the deadline for federal returns, they might worry about the IRS penalties and fines they will have to pay in addition to the amount of tax already due. If you are one of them, try not to panic as FinanceShed is here is assist you with what to do if you Forgot To File Taxes and Filing Taxes Late.
What Are The Consequences?
There are two types of penalties imposed if you have not paid the federal taxes. In addition to the interest charged on the amount payable that are separate penalties for both filings and paying late. If your return is more than 60 days late, the minimum penalty is lesser than $210 or 100% of the overdue amount, which is balance tax payable. The maximum penalty to be paid is 25% of the unpaid tax.
Generally, tax penalties are imposed based on the amount you owe. Thus, if you owe no taxes probably you will not have a penalty. If you owe taxes it is better to file as soon as possible. The longer you wait, the higher the penalties grow. You can also request a penalty waiver if you have an acceptable reason for not filing till the deadline. Attach a statement to your return fully explaining your reason for filing or paying late.
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Filed for an Extension?
If you know that you won’t make it to the deadline, it is advisable to file an extension that pushes back the tax filing deadline. If you filed an extension by April 15, 2019, for 2018 filing, it can allow you an extra six months, pushing your deadline to October 15, 2019.
Filing of extension releases you from the payment of penalty. Remember, it does not mean an extension of time to pay your taxes as you can file a return later but you have to pay your dues. You can also check these Money management tips to brighten your future.
IRS Guidelines for Late Payment
Once you come to know that you are late, you should file and pay as soon as you can to minimize any penalty and interest charges. Also, you can use the IRS Free File the Filing Software to e-file your federal taxes for free. Try to use these e-filing sites as it is the most accurate way to file a tax return.
Those who have refund claims shall file as they are qualified for certain tax credits. Remember to file this return within three years or you can lose your claim to refund. You must be wondering What Exactly Taxable Income Mean so that you can read more and then file taxes.
Negotiating with IRS
When you file your overdue return and not able to pay all the penalties, you can have a negotiation with the IRS. For this, you need to consult the taxpayer advocate service. IRS can compromise if the following conditions are fulfilled:
- Doubt regarding the correctness of taxes.
- Doubt on your capacity for payment of taxes.
- If there is no doubt about the correctness of your capacity to pay the tax then payment can result in economic hardship.
Also, if you are of the opinion that you won’t be able to pay the whole due at a time, you can file your return and request IRS for a monthly payment plan by attaching Form 9465 Instalment Agreement Request. IRS would help you pay your tax at your convenience. For all financial aid and guidance, keep making your way to FinanceShed.