Paying taxes can be hectic…but missing the deadline for them can be even worse.
With added fees and other paperwork thrown into the mix, people often worry about how much trouble they’ll be in, as well as if they might end up in jail (you won’t). While it’s a serious thing to get your tax filings in faster than you can say 1099, it’s not necessarily going to paralyze you. That’s why we’re breaking down what you should do if you missed the July 15th deadline. Check it out below:
While you might be thinking it’s the end of the world for missing the deadline, it’s a simple problem to fix; however, one that you want to get going on quickly.
Generally speaking, the earlier you deal with the IRS, the better, as you’re likely to incur fewer fees. As noted by Nerdwallet, the fees for missing your filing can range from 0.5% per month, all the way up to a 25% maximum of the total bill. Additionally, the IRS can also tack on a late filing fee of 5% as well. Considering taxes are a certainty, the more you put off filing, the worse your situation could possibly be. Instead, knockout the paperwork, focusing on the money owed after the fact.
Learn If You Owed Money (Or Will Receive A Refund)
After you’ve gathered your forms for filing, learn if you owe money or will receive a refund. If it’s the latter, then you’re in a pretty good position, with the IRS most likely holding your funds until your forms are filed. However, owing money puts you in a little bit more of a complicated position.
… if your debt to the IRS is more than you can handle all at once, try to establish a payment plan after filing.
If You Owe, Decide How Much You Can Pay Upfront
At the time of filing, it’s important to pay as much as you can towards your tax obligations. Not only will it make things easier on yourself from a negotiation standpoint, but you’ll also avoid fewer fees. Although you might not want to wipe out your savings, giving up a healthy share to show the IRS you’re serious can help quite a bit in the long-term.
Estimate What Your Late Fees Might Be
Once you’ve established what you owe and can pay for, make sure to estimate what your late-fee might be. As everyone’s tax situation is different, it’s safe to assume that you most likely won’t be hit with the maximums across the board off the top. Especially with COVID-19 disrupting the economy, the idea that the IRS will put down the proverbial iron first over a late payment seems somewhat egregious. A good way to get ahead of the problem regardless though is by establishing a payment plan.
Ask For A Payment Plan (if need be)
Finally, if your debt to the IRS is more than you can handle all at once, try to establish a payment plan after filing. In some cases, you can even offer the IRS a settlement depending on the total debt. Granted, if you think it’s an amount that you can knock out in a timely manner, then setting up a payment plan online is super simple. Depending on your situation, you might even be able to pay a small amount for a while, then offer a settlement later on…or even have the rest of your debt forgiven.
If you need help after missing the July 15th deadline, let us know. Our team has experience with settlements, payment plans, and even helping to reduce fees.
Want an accountant that supports your mission?
Your financial wellbeing is only part of the equation. Stand firm knowing your accountants back your organizations values, goals, and team, too.