You missed the April filing deadline. What now?
For whatever reason, you didn’t file an income tax return the April deadline. Don’t wait until next year, and don’t think that the IRS won’t notice. You need to do something about it now. If you didn’t file because you didn’t think you’d have enough money to pay your tax bill (or you waited too long and simply couldn’t complete your tax preparation), you could have applied for an extension. The IRS still expects you to send in what you think you’ll owe, but if you pay at least 90 percent with the extension, you may avoid some penalties. You’ll then have six months to pay all taxes due and turn in your tax return.
File and pay as quickly as you can, whether or not you can pay the entire amount due. That’s what the IRS says to taxpayers who missed this year’s deadline. This will minimize penalties and interest charges (the agency charges interest, a failure-to file penalty, and a failure-to-pay penalty if you owe). You may be able to avoid these if the agency accepts your reason for being delinquent.
There’s no penalty if you’re due a refund, but you must file for it within three years. How do you file? You cannot file electronically after the extension deadline in October, either on the IRS servers or through commercial software or websites. You’ll have to file a paper return. You can either send a check along with your return or use the IRS’ online payment options.
What if you can’t pay the total due? The IRS offers options here, including applying online to make installment payments and requesting a temporary delay.
Warning: Remember that the IRS will not send you an email or make a phone call demanding immediate payment. Such a request is part of a phishing scam.
Planning Ahead, Always
How do you keep this from happening again? Our suggestion is that you start doing tax planning year-round. Tax planning should really be a part of your overall financial planning, and it’s something you need to be thinking about all year.
We can help you in several ways here, by:
• Working with you to understand what you should be doing every month and quarter to increase your understanding of your ongoing income tax obligation.
• Make recommendations when your company is planning to make large purchases. We can advise you on timing and on how you should be claiming the acquisition on your tax return.
• Going over your business expenses with you. Do you know what items should be recorded, categorized, and included when you file?
• Creating reports that will help you calculate your quarterly estimated taxes.
• Preparing your income taxes when the time comes.
By always considering the tax implications of your income and expenses, you accomplish three things. You make smarter purchases – and at times when you need the deduction. You’re less likely to get a big, ugly surprise at filing time. And you may well be able to minimize your obligation to the IRS.
Still sitting there with a pile of receipts and forms from an unfiled return? Let us help you get back on track.