(DailyVibe.com) – Have you missed the IRS deadline? Don’t panic — as long as you act fast, there are measures in place to help you. Missing that deadline can feel quite stressful — no one likes that feeling. With so much going on at the beginning of the year, April sneaks up fast.
While it’s true that the IRS instills penalties when tax payments are late, there are clear procedures, processes, and resources for those who file late. If you’re willing to remain communicative with the IRS, and you’ll be able to commit to a payment plan if you owe money, things can work out without too much difficulty.
How to Determine Whether You’ll Get a Penalty for Filing Taxes Late
Here’s some good news: if you are getting a tax refund, you do not have to worry about getting a tax penalty at all. In fact, you have three years to file if you’re owed a refund. If you typically get a refund or you are classified as low-income, filing taxes late (if done within that three year period) could actually result in you getting money — not owing!
However, if you owe money, that’s where the IRS becomes concerned and may institute penalties. That said, it’s always better to file late than not at all. You may get a 5 percent penalty per month when lateness applies, and that begins with the first day of being late.
Can You Do IRS Payment Plans?
Unlike typical creditors like credit card companies, the IRS is extremely easy to work with. Their website is also very user-friendly. You can make single payments at any time, and even put payments on credit cards. If you owe them, reach out and talk to them — they are often willing to work with people. If you owe taxes but can remit payment in under 120 days, they may even waive the interest. To get this deal, you will have to speak with them directly.
How to Avoid Late Tax Penalties
Do you know you’re going to be late in filing your taxes, but the deadline has not yet passed? No problem. You can file for a (free) tax extension. If you have extenuating circumstances such as a death in the family or an illness, you should definitely file for an extension. Usually, you’ll have to file by mid-October, and this staves off penalties.
When you’re worried about taxes, or when the deadline has always passed, you can never go wrong by consulting your accountant. Make sure your accountant is a CPA, or a Certified Public Accountant. This is a tax professional licensed to practice in your state. They can also help you estimate whether you should expect to owe, or get a refund.
Self-Employment, W-2s, and 1099s
One thing that often trips up tax filers is having multiple types of income. If you’re employed full-time, or were for part of the year you’re filing for, you’ll have W-2 income. If you’re self-employed and have an S-Corp, sole proprietorship, or LLC, your paperwork will become a bit more complex, and you’ll have 1099 forms in the mix. While this may seem confusing to you, as long as you keep accurate paperwork, it’s not that unusual for most accountants.
Per the IRS, you should also feel encouraged to file late for the following reasons:
- Avoid further interest and penalties
- Claim your refund if you’re owed (as long as it’s within three years)
- Refrain from putting your Social Security self-employment contributions at risk
- Your tax documents are required for loans, rental agreements, etc.
Again, the IRS is surprisingly friendly and encouraging when it comes to all aspects of tax filing. If you have any questions, head to their website or give them a call.
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