What To Do If You Have Not Filed Or Paid Your Taxes Yet
Although tax day has come and gone, it's not too late to file or pay your taxes. Whether you're only a few days late or a few years late, it's time to address your tax issues if you have any. Trust me they will not going to disappear. Educating yourself on the rules of the tax game and your options is your first step.
Although everyone isn't required to file federal income taxes, most adults are. People whose income falls above a certain limitation for their age and filing status must file federal income taxes by law. No exceptions. However, those who are of a lower income are not required to file. If you are unsure whether you meet the threshold check the IRS website
What happens if you do not file your income taxes? You could very well face "failure to file penalty". Typically it’s 5% of the unpaid taxes for each month that you’re filing was late. However it won’t exceed 25% of your unpaid taxes overall.
What happens if you owe money to the IRS? You could face a “failure to pay” penalty. This is 0.5% of your unpaid taxes, but could be up to 25% of your unpaid taxes.
Even if you can't afford to pay, at least contact the IRS to get more information about one of the following options:
120 Days Pay-In-Full - If you're unable to pay Now, but can pay soon. It'a not a formal payment option, so there's no application of fee, but interest and any penalties will continue to accrue until it's paid off.
Installment Agreement - This is a fixed monthly payment plan
Offer In Compromise - This plan allows you to pay less than the full amount you owe. Experts say these are not widely granted.
Side Note: If you got an extension on your taxes, it only give you added time to file, not to pay.
THE GOOD NEWS:
Although you haven't filed in the past, you just might actually get money back when you file. According to a Turbo Tax representative, the IRS reports they had approximately $1 billion in unclaimed refunds last year. Some of that money may just belong to you.
THE NOT-SO-GOOD NEWS:
If you are due a refund, there is no penalty for filing your tax return after the deadline. However, you only have three years to file and claim, or you'll forfeit your refund. According to Texarkana Gazette, "It's typically students, part-time workers and others with low to moderate income who overlook filing and are due a refund."
The IRS website is a great starting point. Reaching out directly to the agency is also a great place to start. The Taxpayer Advocate Website is also a great resource. It has offices in every state. You may feel more comfortable reaching out first to an accountant or tax attorney for help as well. Lastly, if you feel like you would be better served by an actual tax professional, but it's beyond your budget, there are Low Income Taxpayer Clinics that can assist you with tax disputes for free or for a low fee.