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What If You Forgot to File Taxes on Time?

April 18, 2019

Did you "otter-ly" forget to file your taxes before the deadline?

The sooner you file, the sooner you get your refund. And if you owe the IRS money, the sooner you file, the lower your tax bill.

Check for these five qualities to make sure your tax pro is qualified and the best for you.

Tax Day 2019 has come and gone. The deadline for filing your taxes was this past Monday, April 15 (unless you are a resident of Maine or Massachusetts, in which case your deadline was this past Wednesday, April 17). If you forgot to file or request an extension in time, you’re now officially late in filing your 2018 taxes. But what does that even mean? What happens if you forgot to file taxes on time? We’ll walk you through the consequences of not filing on time and what you can do about it.

If you forgot to file, you could face the pesky failure-to-file penalty.

The IRS may assess the failure-to-file penalty to any taxpayer who does not file by the deadline and who has an outstanding tax balance. The failure-to-file penalty is 5 percent of your unpaid taxes for each month your tax return is late (up to 25 percent). You’ll also get plenty of reminders from the IRS to file your taxes.

Think you can avoid this penalty by filing today? Unfortunately, it starts accruing the day after the deadline.

If you owe taxes, the IRS could hit you with extra penalties, interest, and worse.

Forgot to file taxes and have an outstanding tax bill? If you didn’t pay the IRS the full amount of taxes owed, you could be facing a failure-to-pay penalty. If you’ve got the failure-to-file and the failure-to-pay penalties running at the same time, they’ll cap at 5 percent of your unpaid taxes per month.

As far as penalties go though, this year you could be in luck. More people than ever are expected to have underpaid the IRS, thanks to the reform affecting 2018 taxes. To help combat this issue, the IRS has expanded their relief from their underpayment penalties.

If this isn’t your first year forgetting to file your taxes, your consequences could be a lot more severe. In addition to even more penalties, you could face wage garnishment and other levies. The IRS could even take you to court. Now luckily, the IRS won’t take those drastic actions without warning, but it’s still important to remember how serious the IRS can be.

Owe more than you can pay? There are always options like a payment plan or an offer in compromise that you could qualify for.

Say goodbye to your refund until you file.

Got money waiting for you in the form of a tax refund? The good news is that you won’t face the failure-to-file penalty.

The bad news: Unless you file your taxes within three years of the corresponding tax filing deadline, you can kiss that cash good-bye. In 2013, taxpayers who didn’t file left $1 billion in unclaimed federal income tax refunds on the table. And that’s generally cash that people worked hard for but ended up overpaying the government with.

If your choice is filing ASAP or losing money, you’ll want to choose filing every time.

The IRS will consider reasonable causes for not filing by the deadline.

If you’ve got a good reason for not filing your taxes on time, the IRS might hear you out. They must determine whether your reason for not filing on time is sound and established (with proper documentation) before waiving or reducing any penalties. These reasons include:

  • Death, serious illness, incapacitation or other absence of the taxpayer or an immediate family member.
  • Fire, natural disasters, casualty, or other similar disturbances.
  • Inability to get important tax records.
  • Other reason that shows you genuinely attempted to meet your tax obligations but could not.

Reasonable causes if you forgot to file taxes

Note that not having enough money to pay isn’t a listed reason for not filing or paying on time. The only exception here is if the reason you don’t have the money to pay is similar to the ones above.

Even if you have a good reason, the IRS typically doesn’t waive any accrued interest on your balance. If the IRS charged interest on a penalty that they are reducing or removing due to reasonable cause, they can reduce or remove that specific interest.

So, what should you do if you forgot to file taxes?

Easy – you should file those taxes ASAP. The sooner you file, the sooner you get your refund. And if you owe the IRS money, the sooner you file, the lower your tax bill.

When paying right away isn’t an option, tax pros can help negotiate with the IRS on your behalf. Our tax professionals are always available to ensure your unfiled taxes are handled quickly and accurately. Tax Defense Network by MoneySolver has been helping individuals and businesses deal with tax issues with the IRS for over a decade, and there’s little we haven’t been able to help with. If your situation is fixable without our services, we’ll let you know that up front, too. Start with a free consultation today. 

How Do I File a Tax Extension Before the Deadline?

April 11, 2019

Meeting the tax deadline can be doggone hard. That's why tax extensions exist. Learn how to file a tax extension today.

Don’t let the confusing tax law changes cause you to incur a penalty. The best way to get some extra time is by filing an extension.

Check for these five qualities to make sure your tax pro is qualified and the best for you.

It’s not just you; it really does feel like the first few months of 2019 have flown by. We’re finding it hard to believe the federal tax deadline is next week! If you’re in the same boat and don’t know how you’re going to get your taxes filed in time, there’s no need to stress. A simple tax extension can give you the time you need. And rest assured, lots of people will need one this year. In fact, a record 14.6 million requests for filing extensions are expected this tax season. So, if you’re not sure how to file a tax extension, here’s our guide to getting that extension submitted on time.

When Is the Tax Deadline Again?

Unless you live in Maine or Massachusetts, you have until April 15, 2019, to file your federal tax returns. If you are a resident of Maine or Massachusetts, you’ve got until April 17 to file thanks to two legal holidays.

The 2019 Tax Deadline is April 15 for most taxpayers. Wondering, "How do I file a tax extension?" We can help.

What Happens If I Don’t File a Tax Extension?

If you don’t file your tax return by the due date (or by the extended due date if you had an approved extension), you face the wrath of the IRS in the form of the failure-to-file penalty. This is a five percent per month penalty on any unpaid tax balance you have. This penalty is charged each month (or even part of a month) that the return is late, for up to five months. Even if you file your return less than 30 days late, the failure-to-file penalty will apply for the whole month.

Didn’t file your extension on time and owe taxes? You can also receive a failure-to-pay penalty along with your failure-to-file penalty. If you have both these penalties running simultaneously, the IRS limits their combination to 5 percent overall. But let’s be honest: no one wants two IRS penalties at the same time.  

Some people are afraid to file an extension because they think it could trigger an audit. However, the IRS encourages taxpayers to file for an extension if needed to help reduce tax-filing errors.

OK, but How Do I File a Tax Extension?

You can file for a six-month tax extension using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. The IRS will review and hopefully approve your extension. Once you’ve gotten that approval, you’ll have until Oct. 15, 2019, to file your federal tax return.

You can either fill this form out and mail it to the IRS or you can submit it using a Free File software company. Some of these companies will also help you estimate what you’ll owe the IRS, so you can pay on time.

Whichever way you choose to submit Form 4868, make sure you do so by the due date of your return.

Remember: An extension to file is not an extension to pay.

Just because you have an extension on filing your taxes doesn’t mean you’ll have an extension on paying any taxes you owe this year.

What does this mean for you? If you don’t pay the taxes you owe by the April deadline, you stand to face the interest charged on any unpaid tax balance. The IRS might also hit you with an underpayment penalty or a failure-to-pay penalty on any overdue taxes. However, some taxpayers may have a break from these penalties because of the recent tax reform. The Treasury Department has stated that they will allow taxpayers who paid at least 80 percent of their tax bill during the year to avoid paying penalties. 

Also, if you’ve gotten an extension and you pay at least 80 percent of your actual tax liability by the actual April tax deadline, you can avoid a failure-to-pay penalty. How? You’ll need to make sure you pay the remaining balance by your extended due date of Oct. 15.

Even if you do owe, filing your extension will at least help you dodge a failure-to-file penalty. And since the failure-to-file penalty is usually higher than the failure-to-pay penalty, you’ll be dodging a much more financially-burdening bullet.

Will I Still Get My Tax Refund?

Unfortunately, no tax return = no refund. You won’t get your refund until you file your return. The IRS must process your return before determining if you’re due a refund.

Don’t let the confusing tax law changes cause you to incur a failure-to-file penalty. Especially if you’re a business owner, you’ll want to make sure you’re taking the time to make the most of your taxes. The best way to get some extra time is by filing an extension today.

Need help filing your return and maximizing your deductions? Our tax professionals are ready to help.

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