When people realize that they have not filed the taxed and have missed the deadline of 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 of $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 but if you owe taxes it is better to file as soon as possible as 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 and attach a statement to your return fully explaining your reason for filing or paying late.
Filed For An Extension?
If you know that you won’t make it to the deadline, it is advisable to file an extension as it automatically 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 filing deadline to October 15, 2019. Filing of extension release you from the payment of penalty but remember, it does not mean an extension of time to pay your taxes as you can file return later but you have to pay your dues.
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 easiest, safest and most accurate way to file a tax return. For those who have refund claim, shall file as they are qualified for certain tax credits like the Earned Income Tax Credit. 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 for that you can read more and then file taxes.
Negotiating With IRS
If you are not able to pay all your taxes and penalties when you file your overdue return, 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 taxes or your capacity to pay the same but, the payment could be unfair or 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 as per your convenience.