Yesterday was the deadline to get your tax return filed. Hopefully you filed your taxes right on time and are currently relaxing in post tax season glow. If not, here is my advice on how to get your taxes taken care of without incurring excessive fees and penalties.
Don't Wait Any Longer
The best advice I can give you is not to wait any longer. Get your tax returns prepared and filed as soon as possible. If you get your return filed within the next couple of days, any penalties you’re assessed will be minor, and you may escape the penalties altogether. However, the longer you wait, the more you will end up owing Uncle Sam.
Too Late for an Extension
Unfortunately, if you did not request an automatic extension of time to file with the IRS before the deadline, you missed the opportunity to get an additional six months to file your return. Don’t even bother trying to file one now.
Be Fast, But Cautious
Although you should get your returns filed as quickly as you can, you still need to be accurate and meticulous. Mistakes on your taxes can cost you money through missed deductions, or improperly reported income, and can even invite an audit. Only claim deductions and credits that you are entitled to; make sure you include all sources of income on your return; and double check to make sure your Social Security number, address, and other personal information are all accurate. And for heaven’s sake, remember to sign your tax returns!
FTP and FTF Penalties
There are two types of penalties that the IRS can assess, Failure to File (FTF), and Failure to Pay (FTP). Therefore, even if you cannot afford to pay the taxes you owe, you should still file a return ASAP to prevent at least one type of penalties. If you don’t file or pay, the IRS will hit you with both.
If you do not have enough money in the bank to pay the taxes you owe, you might want to think about paying by credit card. The IRS does accept credit card payments, just be aware that you will have to pay an additional fee, as well as interest to your credit card company. Of course, that might be a small price to pay for avoiding the stress and hassle of IRS debts.
Depending on how much you owe, you may be able to set up a payment plan with the IRS, also known as an installment agreement. If you owe less than $25,000, you can use the IRS' Online Payment Agreement program to submit your application. Alternatively, you should consider contacting a tax lawyer or enrolled agent to prepare the application on your behalf.
If you do not file a return, then the IRS will file a substitute return on your behalf. This is not a good thing since the IRS will likely not include deductions, credits or exemptions for which you are eligible. As you can imagine, that can make your tax bill much larger than it should be. Avoid the entire mess, and file your returns, even if they are late.
State Tax Returns
Like I mentioned in last week's Questions for The Tax Lady entry, some states, including California, will automatically give you an extension if you do not file before the deadline. However, every state has different rules for late filing and payments, so be sure to contact your state’s tax agency to make sure that you are compliant.
Remember, you always have the option to hire a professional to help get your return filed, and setup a payment plan with the IRS. Just keep in mind that many tax preparation offices have seasonal hours, so remember to call and make an appointment as soon as possible.