What to Do If You Haven’t Filed an Income Tax Return
Filing a past due return may not be as difficult as you think, and contrary to what some might have expected, this tax season was not extended due to COVID-19. Unlike last year that was extended until the middle of May (and the middle of the summer the year before), this tax season ended with the regular filing deadline in April.
Taxpayers should file all tax returns that are due, regardless of whether full payment can be made with the return. Depending on an individual’s circumstances, a taxpayer filing late may qualify for a payment plan. It is important, however, to know that full payment of taxes upfront saves you money.
Here’s What to Do When Your Return Is Late
Gather Past Due Return Information
Gather return information and come see us. You should bring any and all information related to income and deductions for the tax years for which a return is required to be filed.
Payment Options - Ways to Make a Payment
There are several different ways to make a payment on your taxes. Payments can be made by credit card, electronic funds transfer, check, money order, cashier’s check, or cash.
Payment Options - For Those Who Can’t Pay in Full
Taxpayers unable to pay all taxes due on the bill are encouraged to pay as much as possible. By paying as much as possible now, the amount of interest and penalties owed will be lessened. Based on the circumstances, a taxpayer could qualify for an extension of time to pay, an installment agreement, a temporary delay, or an offer in compromise.
Taxpayers who need more time to pay can set up either a short-term payment extension or a monthly payment plan.
• A short-term extension gives a taxpayer up to 120 days to pay. No fee is charged, but the late-payment penalty plus interest will apply.
• A monthly payment plan or installment agreement gives a taxpayer more time to pay. However, penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the installment agreement/payment plan. In terms of how to pay your tax bill, it is important to review all your options; the interest rate on a loan or credit card may be lower than the combination of penalties and interest imposed by the Internal Revenue Code. You should pay as much as possible before entering into an installment agreement.
• A user fee will also be charged if the installment agreement is approved. The fees to set up the payment plan range from $31 to $225, based on the type of plan you set up. Setting up your plan online with automatic direct debit is the least expensive fee, while applying by phone, mail or in person and making your own payments, rather than having them taken out automatically, carries the most expensive fee.
What Will Happen If You Don’t File Your Past Due Return or Contact the IRS
It’s important to understand the ramifications of not filing a past due return and the steps that the IRS will take. Taxpayers who continue to not file a required return and fail to respond to IRS requests for a return may be considered for a variety of enforcement actions.
If you haven’t filed a tax return yet, please contact us. We’re here to help!
Jeffrey Schweitzer can be found at Northeast Financial Strategies Inc (NFS) at Wampum Corner in Wrentham. NFS works with individuals and small businesses providing financial and estate planning, insurance, investments and also offers full service accounting, bookkeeping, payroll, income tax preparation, and notary public services. For more information, stop by the office, call Jeffrey at 800-560-4NFS or visit online - www.nfsnet.com