Falling behind on filing your annual tax returns can happen to anyone. Whether due to procrastination or you’re just too busy, bear in mind that the farther you fall behind, the worse the circumstances will become. Penalties are only the beginning and rest assured, the government never loses track of how much money you owe them and its just a matter of time before the IRS will attempt to collect.
Unfiled Tax Penalties and Interest
As you likely already know, the deadline for filing your returns is April 15 of each year. If this date passes and you have not filed, you will immediately begin accruing interest on the amount you owe and it compounds daily. In this case, two fees may be applied; a late filing penalty and a late payment penalty.
You’ll be penalized at 5% of the unpaid tax amount for each month you’re late or part thereof, up to a maximum of 25% of the outstanding balance due to the IRS. If you file more than 60 days late, you’ll pay a minimum of $135 or 100% of the taxes you owe (whichever is less). If you file but don’t pay your taxes owed by the deadline, a 1/2 of 1 percent failure-to-pay penalty is also applied which accrues interest each day after the tax-filing deadline. If you missed the filing deadline for 2019 taxes, this is what you can expect.
While the April 15th deadline is still more than a month away, if you don’t have all of the necessary documents and or anticipate not being able to file your taxes by the April 15 deadline, you have options to avoid unwanted penalties and fees.
How You Can Avoid and Reduce Late Fees
You can request an extension with the IRS by the April 15 deadline and this still gives you until Oct. 15, an additional 6 months, to file your 2019 taxes. However, this filing extension only applies to the filing deadline. You will save on the failure to file penalty, however, it doesn’t extend the time to pay your taxes. If you file after that April 15th deadline, even with an extension, your balance will still accrue interest
What’s The Worse That Can Happen?
While you do have options, and 5% here and 5% there may not seem like a lot of money, it adds up. Also, when it comes to collecting uplaid taxes, penalties are just the beginning. There are several other more severe circumstances that can be levied against you don’t file your taxes.
The IRS Could Take Your Tax Refund
If you’re like most Americans, your annual tax refund is a big deal and not receiving it due to owing back taxes can impact your bottom line at home. Even if it’s not a part of your operating budget for the year, that vacation, new fridge or new car will have to wait if you get too far behind on filing your taxes.
Your Social Security Could Be Impacted
For self-employed tax filers, not reporting any income to the Social Security Administration could have dire consequences. Although this may not affect you immediately, if you fail to report any income, there is a high possibility that you won’t receive credits for your social security retirement benefits. Upon retirement, this could become an issue especially if you’re on a fixed income.
Your Procrastination Could Land You In Jail
Although this is an extreme situation, if you ignore your taxes for too long, procrastination can turn to tax evasion. However, before it gets to this extreme, the IRS will have tried to reach you. For an unfortunate few that ignore their attempts, at contact, they will come and arrest you. But that’s not all. The IRS will also seize assets, freeze bank accounts, shut down your business and a host of other measures to recover the tax debts you owe. The IRS is not out to just lock people up. Honestly, they would rather work with you. So, if you are behind from previous years, or you anticipate not being able to file or pay by April 15, 2020, we strongly recommend taking the following action.
Be Proactive And Make the First Contact
If you owe, even if you are unable to pay all you owe now, call the IRS. There are a number of options available for people in your situation that will lead to much better results than ignoring the issue. Despite most preconceived notions, the IRS will work with you if you communicate with them. There are helpful programs and benefits you can qualify for that the IRS offers. If You can take advantage of an Offer in Compromise that can lead to paying much less than you actually owe to settle your debt. Another option that could help is by entering an Installment Agreement. Either way, there are multiple options that can help with your tax debt. In either case, we recommend this option first.
Call the Tax Professionals
That’s right! It makes sense to consult an experienced tax resolution firm, that has spent more than two decades helping people settle and overcome their tax debt; especially if you get a free consultation. That is what you get with Alliance Tax Solutions. All initial consultations are free and we’re known for delivering results so call us today (404) 592-1227 and get started. Even if you can endure the hours it will take to interact with the IRS, and you’re familiar with the dozens of forms, we recommend you book a free consultation and see for yourself.
