The payment of taxes is compulsory and we all know that failure to pay our tax is a crime punishable by the law. However, as important as it is for us to constantly remember to pay our taxes, a lot of taxpayers, due to one reason or another, find that they have missed a tax deadline.
With this realization comes the panic; “how much am I going to lose to rectify this?” “Will I get arrested?” “Am I going to jail?” “What do I need to do?”
The first thing you should know is that missing a tax deadline is no reason to panic, but you need to understand what you need to do and what the way forward is.
It has been observed that taxpayers that miss their tax deadline usually fall into one of three categories. The category that the taxpayer falls into, determines the next point of action in that particular situation.
Just missed a tax deadline? Calmly consider these three categories, see where you fall under and what you need to do.
Category #1 –
(Taxpayers that missed their tax deadline and have not previously filed their tax returns or filed for an extension of time to file their tax returns.)
It is certainly not good news for taxpayers in this category. This is because they are eventually going to be charged with two tax penalties; the failure-to-file and the failure-to-pay penalties. If you fall in this category, you can’t file for an extension anymore at this point, it is definitely too late for that., However, the good news is that you can still file your tax returns and pay up your taxes plus the penalties or additional interest accrued due to missing a tax deadline and failing to file.
Furthermore, the tax return needs to be filed as soon as possible, because the earlier you file, the lower the additional interest or penalties you would have to pay, and the longer you wait to file, the more additional interest you would have to pay in addition to your tax liability.
(Taxpayers that missed their tax deadline and have previously filed for an extension of time.)
Taxpayers in this category need to understand what an extension form represents because a lack of understanding of this concept has brought about a lot of misconceptions which usually end up hurting the taxpayer in the long run. An extension form only allows the taxpayer an extension of the time required for filing an income tax return AND NOT an extension on the tax payment deadline. Not meeting up with the tax payment deadline would still attract a tax penalty even though an extension form has been filed.
Therefore, taxpayers in this category will be charged only with the failure-to-pay tax penalty. If you fall into this category, you will need to file your tax returns within the extension period given to you by the IRS, and ensure to pay up your tax as soon as possible plus any additional interest from the failure-to-pay tax penalty that would be given to you.
Taxpayers in this category also need to pay off their taxes fast because the longer the delay in payment, the more interest they would accrue alongside the already existing tax amount.
(Taxpayers that missed their tax deadline but are owed a refund by the IRS.)
It is definitely good news for taxpayers in this category, so if you fall in this category, you have no need to worry because technically you didn’t miss the deadline and you cannot be penalized. Taxpayers in this category have 3 years from the tax deadline to file a tax return to get their refund, while the refund within that period is on loan to the government interest-free. However, you need to remember to file for your tax return within the stipulated period of time, so as not to lose your refund.
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