The last day to file taxes has come and gone for another year. If the date passed you by and you still have not filed your taxes, you’re likely wondering, “do I have to file taxes?” The sooner you take action, the better off you’ll be. If you owe the government money, you have been racking up penalties and interest since the tax deadline.
What happens if the last day to file taxes has passed by?
When you learn how the stock market works, you realize that taxes are important for businesses and individuals. IRS penalties are steep. There are failure to file penalties, failure to pay penalties and interest fees on any late payments. Failure to file penalties are 5% per month of any unpaid taxes, up to 25% of your unpaid tax bill. Failure to pay penalties will total 5% of your unpaid taxes per month that you are late and again up to 25% of your unpaid bill. You will also be charges interest on the total overdue amount, which is currently around 4%. These penalties and fees add up fast and the longer you wait to file and pay, the higher they will be.
If you have not yet prepared and filed your tax return and you didn’t file for an extension date, you should work to complete the task as soon as possible. You can either prepare and file on your own or hire a tax specialist. Many people who file late find it best to work with a tax specialist who has experience in late filings.
Are you filing taxes late for a reason?
If you have not yet filed because you owe the government money and don’t have it, you will need to look at different payment options. One of the easiest ways to pay your tax bill, if you don’t have enough for a lump sum payment, is to set up a payment plan. Many taxpayers don’t realize that they can do this right on the IRS website. Just by visiting IRS.gov you can set up an installment agreement. You’ll pay a small fee for setting this up (just over $100), but it sure beats the interest and penalties that accumulate from not paying. If you set up for automatic payments from a bank account, the fee drops by about half. If you do not have access to the internet you can also call the IRS to set up a payment plan.
Many people choose other options for paying their overdue taxes. Some will borrow from a 401K, cash in sick time at work, borrow the money from a family member or even put the balance on their credit card. These are all viable options that will help you avoid further penalties and interest charges. Just be careful if you put your tax bill on a student credit card, as fees for credit card use can be even higher.
What if you’re owed a refund and you’re filing taxes late?
Surprisingly, many people who file their taxes late are actually due a tax refund. There’s no penalty for filing late if you are due a refund. You will still want to file as soon as possible. There is a statute of limitations, usually three years, before you will forfeit your return.
While it may seem overwhelming to get your taxes prepared and filed, know that not taking action could mean very serious repercussions in the future. Failure to file and pay your taxes not only leads to fees and penalties but can also result in ruined credit and in some cases jail time.