It happens every year: someone forgets to file their taxes by the April 15th deadline. There are many reasons that this might happen, including not getting all of your tax information on time, believing that you don’t have to file, or just completely forgetting about it. No matter the reason, there are penalties for filing taxes late; but there is also a way to do it right.
Filing Taxes Late the Right Way
If you find yourself in the situation where you have to file your taxes late, to prevent getting in trouble or paying more than necessary you’ll want to be sure you’re filing the right way. Below are the steps you can take when it comes to filing taxes late:
File for an Extension
If you know that you aren’t going to make the April 15th deadline for filing your taxes, then you need to file for an extension. Doing so will give you until October 15th to get your paperwork in.
There are some things to know about filing for an extension. The first is that you only need to do this if you owe the IRS money. You will also need to estimate how much you owe and pay that with your extension. The second is that you have to ask for an extension before April 15th to be granted one. If it’s not done by then, it will be too late.
If you are supposed to get a refund, then you won’t need to file an extension. You can take up to 3 years to file your taxes. However, you won’t get your money until you file your paperwork with the IRS. Thus, if you need the money, it’s best to get your filing done as soon as possible.
Be Aware that Fees and Interest Will Still Apply
Even though you are filing for an extension, you are still obligated to pay your taxes. Since you are doing an estimate of what you might owe, you could wind up paying too little. If that’s the case, then interest will accrue for every month that you are late. The average amount is 5% on what you owe, with a maximum of 25%. The sooner you can get your taxes in, the less you will pay in fees and interest.
Ask About Tax Debt Forgiveness
If the reason you are filing taxes late is that you owe the IRS more than you can afford, then in addition to asking for an extension, you may also ask about tax debt forgiveness. Don’t let the name fool you: you probably won’t have your debt completely forgiven. However, there are some programs that can help in the repayment process.
In some cases, you may be able to work out a payment plan with the IRS. This will keep your payments affordable and slowly chip away at your balance. Again, you need to be aware that interest will accrue on what you owe, and you will be responsible for making specific monthly payments. However, this can be more affordable than paying one lump sum.
If your financial situation is dire, then you may be able to qualify for the Offer in Compromise program. This will get rid of your debt completely. Keep in mind that being approved for this plan is extremely difficult, and you’ll have to meet certain criteria.
Work With a Professional
One of the best steps you can take when filing taxes late is working with a professional. They’ll be able to walk you through the process and answer any questions you might have. Contact Geaux Tax Resolution today for help with your late tax filing needs.