What to Do If You Miss the Filing Deadline
You probably have every intention to file and pay your taxes well before the deadline each tax season. Sometimes, though, things don’t work out that way. So what do you do if, well-meaning though you may be, you miss the annual filing deadline?
A lapse in your tax duties can lead to other, more problematic situations which you definitely want to avoid. Before things spiral out of control, you should examine what your immediate course of corrective action. Otherwise, the IRS may just perform this task for you, with results you may not care for.
First and foremost, if the tax deadline is looming and you know that you’re not going to make it, you should request an extension. The IRS will typically grant such a request, pushing your deadline to mid-October. Bear in mind, though, an extension will not excuse you from penalty and interest charges that result from not paying on time. A filing extension merely enables you more time to prepare your return without a failure-to-file penalty.
Failing to Pay
As previously mentioned, an extension does not prevent the IRS from charging you additional fees. What’s worth noting is that interest and penalty charges are assessed monthly, which can steadily increase your total balance. The longer you take to pay, in other words, the more it will ultimately cost you.
Failing to File
If it’s already past the deadline and you did not request an extension, you’ll want to file as quickly as possible. Remember, your employers and possibly your bank have already reported income you earned last year, so the IRS is waiting for you to send concurrent information. When you don’t, they may eventually file for you. This is known as a Substitute for Return (SFR), which allows them to determine your liability based on income reported against you. An SFR will not take into account any credits and deductions which might lower your balance; instead, your tax bill will be based solely on the data the IRS has been provided.
If you’ve avoided completing your tax return because you are trying bypass reporting your earnings, you can expect to hear from the IRS. When taxpayers indicate suspicious details or gaps in income on their returns, the IRS will request a closer examination – otherwise known as an audit. When you fail to file a return altogether, the perception can be the same or worse. Tax evaders can be met not only with penalties, but criminal prosecution.
There’s no shame in admitting you need help in straightening out a tax issue and, in fact, this may be the smartest move you make. If the damage is already done, or is steadily worsening, you owe it to yourself to determine a professional solution. You may find a licensed tax professional invaluable in such circumstances. He or she will assess your situation and will swiftly devise a strategy which prevents you from enduring the full extent of IRS collection efforts.
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