The April 18th tax deadline has passed and you failed to file your tax return or request an extension. Whatever the cause for not filing your return, you must make a decision regarding your next course of action and quickly to remedy the situation. Do not convince yourself that the IRS will simply overlook the matter, in fact the consequences will only worsen the longer you wait to take action.
The most common reason for not filing tax returns on time is when a tax bill is owed. Unfortunately by not filing, the unpaid balance of your taxes will be charged with the failure to file penalty which is 5% a month. If you do not owe the IRS money and you did not file, the IRS will not impose penalties as long as they agree that no taxes are owed. If you are owed a refund and do not file, the IRS will not send you the refund until your taxes are filed. The IRS does not look favorably on individuals who fail to file their income tax return by the deadline, however they will be more willing to work with individuals who take the necessary steps to fix the problem versus those who pretend it doesn’t exist. If you haven’t filed your return on time, the following information can help you back on track and avoid additional fees and penalties.
- File your tax return as soon as possible- There is no way around it, you must file your tax return even if you are filing it late. After the deadline passes you no longer have the option to request an extension, therefore the sooner you file your return the better.
- Determine how long it will take to pay your tax bill- Look at your current financial situation and figure out how much time is needed to pay your tax bill. The ideal scenario would be that you have the resources available to pay your bill in full, therefore eliminating the additional fees and penalties that will accrue over time. If you do not have the resources on hand to pay your tax bill you should determine how long it will take to repay the money owed. This information will be needed in order to set up a payment plan also known as installment agreement or other type of back tax payment plan.
- Contact the IRS to arrange payment- As long as your tax bill remains unpaid, you will continue to accrue penalties and fees that can significantly increase the amount of money owed. By working with the IRS to establish a repayment plan, you can begin making payments to reduce your tax bill, thereby reducing the amount of fees and penalties that are applied to the liability.
- Consider a loan- Depending on the amount of money owed and your ability to secure personal financing, you may want to consider borrowing money to pay off your tax bill. Before doing so you should carefully review the terms of any new loans to ensure you are selecting the option that will save you money in the long term.
It is not uncommon to feel overwhelmed or intimidated when dealing with the IRS and unresolved tax issues. If you have failed to file your tax return on time and do not feel up to dealing with the situation on your own, consider hiring a tax professional to help guide you through the process. Delaying the inevitable will only result in additional stress on your part and a growing tax bill that will have to be addressed at some point in time in the future. The sooner you face the situation and develop a plan to deal with any taxes owed, the sooner you will be able to resolve the problem and move on with your life.