Tax season is here and that means it’s time to get to work! But, maybe you’ve found yourself in a little bit of a dilemma. Maybe you’ve found that you don’t have the time you thought to gather your information and file on time. Or maybe your tax process is a little more complicated because you’re a business owner. Whatever the case might be, sometimes we find ourselves needing a little extra help. Lucky for you, there are options when it comes to you and your taxes.
Requesting an Extension
Need to postpone your tax returns? To request an extension to file, you must complete Form 4868 and file it with the IRS by April 15 for the year your tax return is due. This gives you an automatic six-month extension. To get a current copy, visit your district office, call 800-TAX-FORM or visit www.irs.gov to download a copy. You must still pay at least 90% of the tax due by April 15th or the IRS will fine you 1/2 of 1% of the taxes you owe per month until you pay.
Need more time?
If you still need or want more time, you can request a second extension from the IRS by filing Form 2688. You must file this form by August 15 and must state “good cause” for needing more time. The second extension is granted at the discretion of the IRS.
What if you haven’t filed?
Even if you can’t pay the tax you owe, it is still better to file a return. It is a crime not to file a tax return if taxes are owed. According to the IRS, a “willful failure to file” a tax return is a misdemeanor that can get you up to a year in jail and a $100,000 fine for each year of non-filing. There is no criminal penalty if you file, but withhold paying the taxes. You will owe interest and penalties, but you can’t be criminally fined or sent to jail.
What if you can’t pay what you owe?
Pay as much as you can and immediately contact the IRS to explain your circumstances. The IRS offers an Installment Agreement plan to those who owe taxes but do not have the funds to pay in full. Interest and possibly penalty fees will be added to your balance, as well as a one-time user fee that is currently $120. To apply, complete Form 9465, Installment Agreement Request.
Offer in Compromise… If the IRS decides it will be unable to collect the debt in full, it may accept an Offer in Compromise to settle unpaid tax accounts for less than the full amount. The amount you offer must reflect your maximum ability to pay, taking into account all your assets and future income. You can get Form 656, Offer in Compromise, and Form 433A, and Collection Information Statement for Individuals, plus additional information regarding the filing procedure from the IRS website or at any IRS office. There is a non-refundable $150 fee for the Offer in Compromise application.
What if you take no action to pay?
If you do not take some action to pay your bill, the IRS may take any of the following actions:
Your rights as a taxpayer
The following is a summary of Publication 1, Your Rights as a Taxpayer. It explains some of your most important rights, including your right to be treated fairly, professionally, promptly, and courteously by IRS employees.
Tax season can be a stressful time of the year, be sure that you are keeping informed and are up to date on the latest rules and regulations. https://www.irs.gov/government-entities/federal-state-local-governments