What to Do When Your Tax Return is Late
Tuesday, April 17, 2018, was the tax deadline for most taxpayers to file their tax returns. If you haven’t filed a 2017 tax return yet, the sooner you do something about it the better, and it may be easier than you think.
First, gather any information related to income and deductions for the tax years for which a return is required to be filed. Then, call our office.
If you’re owed money, then the sooner you file, the sooner you’ll get your refund. If you owe taxes, you should file and pay as soon as you can to stop the interest and penalties that you will owe.
If you owe money but can’t pay the IRS in full, you should file anyway and pay as much as you can to minimize penalties and interest. The IRS works with taxpayers suffering financial hardship. If you continue to ignore your tax bill, the IRS may take aggressive collection action.
How to Make a Payment
There are several different ways to make a payment on your taxes. Payments can be made by credit card, electronic funds transfer, check, money order, cashier’s check or cash. If you pay your federal taxes using a major credit card or debit card, there is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or a flat fee. It is important to review all your options; the interest rate on a loan or credit card may be lower than the combination of penalties and interest imposed by the Internal Revenue Code.
What to Do if You Can’t Pay in Full
Taxpayers unable to pay all of the amount owed on a tax bill are encouraged to pay as much as possible. By paying as much as possible now, the amount of interest and penalties owed will be less than if you do not pay anything at all. Based on individual circumstances, a taxpayer could qualify for an extension of time to pay, an installment agreement, a temporary delay or an offer in compromise. Please call us, if you have questions about any of these options.
For individuals, IRS Direct Pay is a fast and free way to pay directly from your checking or savings account. Taxpayers who need more time to pay can set up either a short-term payment extension or a monthly payment plan.
A short-term extension gives a taxpayer an additional 60 to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply. Generally, taxpayers will pay less in penalties and interest than if the debt were repaid through an installment agreement over a longer period of time.
Most people can set up a payment plan using the Online Payment Agreement tool on IRS.gov. A monthly payment plan or installment agreement gives a taxpayer more time to pay. However, penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the installment agreement/payment plan. You should pay as much as possible before entering into an installment agreement.
Taxpayers who owe $50,000 or less in combined tax, penalties and interest can apply for and receive immediate notification of approval through an IRS web-based application. Balances over $50,000 require taxpayers to complete a financial statement to determine the monthly payment amount for an installment plan.
A user fee will also be charged if the installment agreement is approved. The fee (effective January 1, 2017) is normally $225 but is reduced to $107 if taxpayers agree to make their monthly payments electronically through electronic funds withdrawal. The fee is $43 for eligible low-and-moderate-income taxpayers.
Individual taxpayers who do not have a bank account or credit card and need to pay their tax bill using cash are now able to make a payment at one or more than 7,000 7-Eleven stores nationwide. Individuals wishing to take advantage of this payment option should visit the IRS.gov payments page, select the cash option in the other ways you can pay section and follow the instructions.
What Happens if You Don’t File a Past Due Return
It’s important to understand the ramifications of not filing a past due return and the steps that the IRS will take. Taxpayers who continue to not file a required return and fail to respond to IRS requests for a return may be considered for a variety of enforcement actions–including substantial penalties and fees. Eventually, if you do not file a return, the IRS may prepare one for you, and it will often result in more tax than a return you submit yourself.
Need Help Filing Your 2017 Tax Return?
If you haven’t filed a tax return yet, don’t delay. Call our office today to schedule an appointment as soon as possible.