It is important to file your income tax returns and pay any taxes that you owe, on time. The fees and interest will continue to accumulate until your balance is fully paid. If you didn’t file your taxes by the deadline, the penalties will be much higher than if you file on time but are unable to pay on time.
If you missed the filing deadline, don’t fret, we at Senter, CPA are here to help inform you of your options, and give you the necessary tools to file your return, and pay your taxes, as soon as possible.
If you didn’t file on time, what should you do?
- The filing deadline has come and gone. If you didn’t file your tax return or file an extension by the deadline, there’s no need to panic. Just proceed to prepare your return as normal, and file it as soon as you can.
What if you owe taxes and didn’t pay on time?
- If you didn’t pay your taxes on time and didn’t file an extension, you will most likely owe some fees and interest on your taxes owed, as well as a penalty for late filing. The sooner you can file your return and pay your debt, the better. If you’re unable to pay the full amount, pay what you can. You can even make your tax payment online.
- If you choose to avoid paying your taxes, the IRS will continue to fine you and charge interest until the full amount is paid. If your debt is not paid and continues to increase, the IRS can levy your wages or bank account, put a lien on your property, or, if the amount owed increases enough, you could face possible jail time (you would have to owe a substantial amount to go to jail).
What if you owe but are unable to pay?
- If you owe taxes but don’t have the money to pay, you can contact the IRS to set up a payment plan. A payment plan, or installment agreement, lets you pay the taxes that you owe over a longer period of time. The IRS allows you to pay over the span of up to 72 months. Keep in mind, a payment plan will incur some interest and penalty charges, but it’s a great option if you’re unable to pay the lump sum upfront.
- Applying for an Offer in Compromise is another option if you’re unable to pay your taxes owed. An Offer in Compromise is a long process that involves a lot of documentation to prove that you can’t afford to pay your tax bill. The IRS rejects most applications, but if approved, it lets you settle your tax debt. One of the major benefits of an Offer in Compromise is that you will end up paying less than what you really owe.
- If your wages only cover your necessary living expenses, and no more, so that there is no amount for the IRS to garnish, you can ask to receive the “currently not collectible” status. This is not a permanent status, but it will temporarily delay collection. You will eventually need to pay your tax debt. To obtain a currently not collectible status, you’ll need to fill out a form and provide the required information about your assets, monthly income and expenses.
- If you’re unable to pay the taxes that you owe, you do have options, but not every option is the most beneficial for everyone. Be sure to consult your tax professional to discuss what would be the best course of action for you.
What if you didn’t file on time, and you are expecting a refund?
- If you didn’t file an extension, and are expecting a refund, you will most likely not owe a late filing fee. Although you will not be penalized for not filing, you will not receive your refund from the IRS until you file your return. Be sure to file sooner than later. After 3 years of not filing, you will no longer be able to receive your refund; it will be lost.
Consult a professional.
- This entire process can be a little intimidating, and it may be difficult to understand exactly what the IRS is requiring of you. That’s why there are professionals who are ready to lend a helping hand and make this process all the more bearable. Consult with your CPA, and ask them to explain the best available options to getting you in good standing with the IRS.
We are always here for you if you have any questions.
Feel free to give us a call at 248-934-0550, or contact us below.