Friday, April 18, 2014

Taxes: better late than never

April 15th has come and gone.  Most of us feel relief that the chore of filing the return and paying income taxes is done.  For some, the pleasure is fleeting - as they have simply filed for an extension, and so postponed the problem until August 15th.  And for others, those with taxable income who have not filed their return and do not plan to, somewhere in their future lurks the penalties for failure to file a return, and the failure to pay the tax that is due.  

Which one is worse?  Failure to file.  

The IRS can understand the failure to pay - if you don't have the money, then they will work with you.  But they take a more dim view of the failure to file.  Our system is one of voluntary compliance.  Everyone is counted on to pull on their oar.  And if you are not pulling on your oar, it means more work for the rest of us.

If you file late, you will need to pay 5 percent of the unpaid taxes for each month or part of a month that a tax return is late, plus a failure-to-pay penalty of 1/​2 of 1 percent of your unpaid taxes.  And if you never voluntarily file or pay, and they must find you, then you will face civil fraud penalties, a criminal misdemeanor charge, or even a felony charge for tax evasion.  So, the lesson is that it is better to file, on time, and then work with the IRS on a payment schedule if you can’t pay what you owe on time.  And with that introduction, here are tips from the IRS on how they will work with you on those issues.  

Tips for Taxpayers Who Missed the Tax Deadline

If you missed the April 15 tax filing deadline, don’t panic. Here’s some advice from the IRS.

• File as soon as you can.  If you owe taxes, you should file and pay as soon as you can. This will help minimize the interest and penalty charges. There is no penalty for filing a late return if you are due a refund.

• IRS Free File is your best option.  Everyone can use IRS Free File to e-file their federal taxes for free. If your income was $58,000 or less, you can use free brand-name software. If you made more than $58,000 and are comfortable preparing your own tax return, use Free File Fillable Forms to e-file. This program uses the electronic versions of paper IRS forms. IRS Free File is available through Oct. 15 only through IRS.gov. 

• IRS E-file is still available.  IRS e-file is available through Oct. 15. E-file is the easiest, safest and most accurate way to file your taxes. With e-file you receive confirmation that the IRS received your tax return. If you e-file and choose direct deposit of your refund, you’ll normally get it within 21 days.

• Pay as much as you can.  If you owe tax but can’t pay it all at once, try to pay as much as you can when you file your tax return. Pay the remaining balance as soon as possible to stop further penalties and interest.

• Make a payment agreement online.  If you need more time to pay your taxes, you can apply for a payment plan with the IRS. The easiest way to apply is to use the IRS Online Payment Agreement tool. You can also mail Form 9465, Installment Agreement Request. The tool and form are both available on IRS.gov.

• A refund may be waiting.  If you’re due a refund, you should file as soon as possible to get it. Even if you are not required to file, you may still get a refund. This could apply if you had taxes withheld from your wages or you qualify for certain tax credits. If you don’t file your return within three years, you could forfeit your right to the refund.

For more information, visit IRS.gov.

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