I Forgot to File Taxes: What Are the Consequences?
If you notice that you forgot to file your taxes, you may wonder about the next steps and what consequences you might face. Usually, the due date isn’t fixed, and you can file for an extension, so all may not be lost yet. However, there are a number of issues that can crop up if you miss the extended deadline, as well.
These might include a penalty for failing to file, a penalty for failing to pay, interest on the tax that is due, and a loss of your refund for previous years. However, with timely action and the help of a tax resolution specialist, many of these problems can be avoided or reduced.
Failure to File Penalty
People who don’t file their taxes but are required to do so will receive a notification from the IRS about this. Depending on how late they are and how much tax they owe, the penalty will vary, but in most cases, it will be 5% of the total amount due for each month that the return is late. This is capped at 25% of the unpaid taxes, so the penalty doesn’t increase after five months.
When calculating how much you might have to pay, you should remember that the minimum penalty for people who are more than 60 days late is $435 and that the IRS will charge interest on the tax that is due and this additional amount. Thus, your debt will grow even if you’ve reached the five-month cap.
Failure to Pay Penalty
Usually, you won’t have paid your taxes if you’ve failed to submit your return, so you’ll also face a failure to pay penalty. This is 0.5% of the amount due every month, but if you have both a failure to file and a failure to pay penalty, they will be combined, so you still pay just 5% of the outstanding tax balance each month.
You can have both types of penalties reduced or removed, particularly if you’ve never had issues with the IRS before. What’s more, if you believe that you have been charged unfairly, you can dispute them. The easiest way to do this is with the help of a tax resolution professional.
As mentioned, you will pay interest both on your outstanding balance and the penalties that you have accrued. These are calculated and compound daily, which means that the amount can quickly increase, and it’s worth taking action sooner rather than later. The rates change quarterly, and you should ask your specialist about the current amount and how much you might owe in interest given the size of your tax bill and penalties.
Losing Your Refund
Some people fail to file their taxes on time, but once they get around to it, they realize that they were owed a refund by the IRS. In such a case, there won’t be any penalties or interest charged, but you might run the risk of losing your refund. The statute of limitations is usually three years after the due date of your return, and filing after this deadline doesn’t result in you receiving the amount the IRS owed.
How Can I Resolve the Situation?
If you’ve noticed “I forgot to file taxes”, you might be worried about all the penalties you’re accruing and how you will be able to pay the amount due. But fortunately, you’re not alone, and a dedicated tax resolution specialist can help you to work through the situation and find an appropriate solution. If you file your return right now, you will know exactly where you stand and be able to minimize the amount you have to pay.
File as Soon as Possible
No matter why you didn’t file or how long it’s been, the best thing you can do now is to file your taxes as soon as possible. Remember that interest accrues daily, which means that every day you delay, you’ll pay an additional fee. Even if you don’t believe you can pay everything you owe at the moment, filing can help to minimize the penalties you face.
Failing to file will cost you 5% of your balance per month, but failing to pay is only 0.5% per month. If you owe a lot of money, filing today can make a big difference. What’s more, it will allow you to take stock of the situation and start to figure out what you will do next. Once you’ve filed your taxes, you can start to negotiate with the IRS.
Get in Touch with a Qualified Tax Resolution Specialist
Figuring out what to do and how to file your taxes can feel extremely daunting, especially if you have delayed doing so and are now worried about the consequences. If you’re not sure how to proceed, get in touch with a qualified tax resolution specialist, who can help you to get started. They will invite you for a consultation to discuss your current filing status, during which they can give you an indication of the penalties you face and how to minimize them.
An experienced specialist will know of all the different ways you can reduce your bill, such as asking the IRS for penalty abatement or an offer in compromise. This could be the best option if you’re worried about paying your tax bill and believe that this would cause you and your family hardship.
Automate Your Future Returns
Every year, you can return to your professional and have them complete your return for you. For a small fee, you will ensure that everything is filled out correctly and you never miss another deadline.
The moment you notice “I forgot to file taxes” can be devastating, but there is usually a solution for your problem and a way to minimize the penalties you accrue. Contact us now at Geaux Tax Resolution in Lafayette, LA to speak to one of our experts and find out more about the strategies we employ for reducing your tax burden. No matter what your situation is, we’ll be happy to help your resolve it and get back on your feet.