Like most of the world you have been bogged down by life, meaning the tax deadline could have completely slipped your mind. We are here to tell you that it is okay. There is no reason to have a meltdown over missing the April deadline, because you are not alone. If you truly don’t want to face the IRS alone, we invite and encourage you to get the help of a tax professional.
Can’t Pay Now?
If you filed but were late in paying tax debt simply because you found yourself between paychecks, pay anyway. We recommend you go ahead and pay as soon as possible. Any debt incurred by not filing will increase, and we all know a growing debt can be an additional source of easily avoided stress. Use a credit card to pay for the debt, rather than letting that amount simmer in the background and boil to a high point. Only use a credit card if the debt is a number that you know that you will be able to pay off eventually.
If the amount owed is quite substantial, the IRS might recommend refinancing your home. This means that you would replace your tax debt with equity for your home. But this action is only for dire situations. We suggest taking every action available to avoid filing bankruptcy or losing your home over a tax debt.
Simply Can’t Pay At All?
The worst thing you can do for yourself is to leave your taxes unaddressed. If you don’t file, you simply don’t know whether you end up owing or actually earning money from your income return. Leaving taxes unaddressed results in a failure to file or failure to pay penalty. Which can continue to grow a increasingly large hole in your finances.
Once you file, you can then choose any of the settlement options below…
- Offer in Compromise(link)- Used when the debt owed seriously exceeds the income of the taxpayer. If you can get this payment option accepted by the IRS you could pay significantly less than your original debt. For a case study and explanation of OIC, check out this video.
- Installment Agreements– Allows individuals to make monthly payments to pay off their IRS debts.
- Penalty Relief- Used when there are extenuating circumstances that made it difficult to file your taxes. Ask a tax professional for help in determining whether your circumstances qualify for this settlement option.
- Bankruptcy- This is the last resort option. Most of the settlement options above address your debts so that they will no longer be an issue. But in some extreme cases this option cannot be avoided. not all tax debt can be removed using a bankruptcy due to a set of rules and laws in the bankruptcy code
File as soon as possible to get a refund and avoid a failure-to-file penalty. Taxpayers who do not file within 3 years of the April deadline forfeit their refund. So for income taxes for 2018 make sure to file before April 15 2022.
If you knew that you wouldn’t be able to make the April deadline and filed a tax extension, if you owe any fees, those fees have to be paid. But you have another 6 months before you must file your taxes without receiving any penalties for not filing. The IRS has some great advice when it comes to your taxes. Following these tips can help you for future tax deadlines.
We know taxes can be confusing and stressful, and sometimes smart solutions need a little assistance. Consult any of the Private Tax Solutions financial professionals by scheduling an appointment today. Call us at 844-774-8829.