Filing Your Taxes Late – TurboTax Tax Tips & Videos

overview What do you do if you ca n’t meet the IRS file deadline ? Learn more about filing a tax reference, deep payment and deep filing penalties, and what to do if you ca n’t pay your taxes. For data on the third gear coronavirus relief software, please visit our “ american Rescue plan : What Does it Mean for You and a third Stimulus Check ” blog post .

 

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The federal tax return filing deadline for tax year 2021 was April 18, 2022:

If you missed the deadline and did not file for an extension, it ‘s very important to file your taxes as soon as possible. Filing with TurboTax is fast, slowly and guaranteed to get you the biggest refund you deserve.

Why file for an extension?

Filing an extension mechanically pushes back the tax filing deadline and protects you from possible penalties. Late-filing penalties can mount up at a rate of 5 % of the amount due with your fall for each calendar month that you ‘re late .

  • For example, if you owe $2,500 and are three months late, the late-filing penalty would be $375.  ($2,500 x 0.05) x 3  = $375
  • If you’re more than 60 days late, the minimum penalty is $100 or 100% of the tax due with the return, whichever is less.
  • Filing for the extension wipes out the penalty.

TurboTax Easy Extension is a fast and easy way to file your extension, veracious from your computer .

How long is my extension good for?

If you filed an extension by April 18, 2022 ( 2021 tax year deadline ), it extends your filing deadline to October 17, 2022 .

  • An extension of time to file your return does not mean an extension of time to pay your taxes.
  • If you expect to owe money, you’re required to estimate the amount due and pay it with your Form 4868.  As long as you do that, the extension will be granted automatically.

What if I didn’t ask for an extension?

The consequences differ depending on whether you owe the IRS money or the IRS owe you a refund .

If you are getting a refund:

This is one of the great little secrets about the federal tax law. If you have a refund coming from the IRS—as about three out of four taxpayers do every year—then there is no penalty for failing to file your tax retort by the deadline, even if you do n’t ask for an extension. however, this might not be the case for country taxes .
That ‘s not to say there are n’t very good reasons for filing on time. even if you have a refund coming, consider the postdate :

  • You can’t get your money back until you file, so you should file as soon as you can to get your money as soon as possible.
  • The statute of limitations for the IRS to audit your return won’t start until you actually file your return. So, the sooner you file, the sooner the clock starts ticking.
  • Some tax elections must be made by the due date, even if you have a refund coming. This applies to a very tiny percentage of taxpayers.

If you have a balance due:

If you have n’t paid all of the tax you owe by the file deadline :

  • You’ll likely end up owing a late payment penalty of 0.5% per month, or fraction thereof, until the tax is paid.
  • The maximum late payment penalty is 25% of the amount due.
  • You’ll also likely owe interest on whatever amount you didn’t pay by the filing deadline.

If you did n’t get an extension ,

  • You are also looking at a late filing penalty of 5% of the unpaid tax per month, plus interest.
  • The maximum late filing penalty is 25% of the amount due.

Beware: No statute of limitations

Regardless of whether you are due a refund or owe, there is another point to keep in thinker : If you never file your reappearance, there is no limit on how many years the IRS can go back to assess and roll up tax .

What if I owe the IRS but can’t pay?

If you find yourself in this site, you have a few options available, such as :

  • credit card payments
  • installment agreements
  • “offers in compromise”

You can besides simply file your render and expect for the IRS to bill you, but do n’t be surprised if the bill includes interest and penalties .

Can I pay my tax by credit card?

Yes, you can pay your tax beak with credit in a variety show of ways. Credit circuit board and bank loans are both payment options. You can apply for a bank loan, family equity loanword or take a cash overture on a credit card to pay your tax bill .
Third party providers like official Payments Corporation are besides available to facilitate using a credit card to pay your tax bill .

  • These companies charge a convenience fee (around 2.5% of the amount being paid) for their service.
  • That fee is in addition to any interest and finance charges your credit card company may charge you.

Can I pay my tax in installments over time?

If you find yourself owing more than you can afford, you should still file a tax return .

  • Even if you don’t enclose a check for the balance due, sending in your return protects you from the late-filing penalty that otherwise would keep digging you deeper into a hole.
  • Attach a Form 9465 Installment Agreement Request to your tax return asking the IRS to set up a monthly payment plan to pay off what you owe.

About 2.5 million taxpayers are paying off their bills under such an arrangement and recently the IRS made it easier to qualify. In the past, before the IRS would okay an installment plan, the agency demanded a attend at your finances—your assets, liabilities, cash menstruate and therefore on—so it could decide how much you could afford to pay .

  • That’s no longer required in cases where the amount owed is under $10,000 and the proposed payment plan doesn’t stretch over more than three years.
  • You can also now apply online for the installment agreement. More details are available on the IRS website

Do n’t think the IRS is a chump, though. You may be better off if you can borrow the money to pay your bill, rather than go on an installation plan which means, effectively, borrowing from the IRS .

  • The IRS charges a $52 fee to set up an installment payment plan for direct debit; $105 for non-direct debit agreements. (For eligible low-income individuals, the fee is $43.)
  • The IRS interest rate on late payments was 3% for the fourth quarter of 2021 and can change quarterly.
  • There’s also a late-payment penalty of 1/4 of 1% a month. The 3% 2021 interest rate plus 1/4 of 1% a month adds up to the equivalent of 6%  a year.

Does the IRS ever negotiate the amount owed?

Under certain circumstances, the IRS is authorized to resolve a tax liability by accepting less than entire payment. An “ put up in compromise ” is an agreement between a taxpayer and the IRS that settles the taxpayer ‘s tax debt. There are three circumstances under which the IRS is authorized to compromise :

  1. When there is doubt that the tax is correct.
  2. When there is doubt that you could ever pay the tax in full.
  3. When the tax is correct and you could pay it, but payment would result in an exceptional circumstance, economic hardship, or be unfair and inequitable.

shape 656 : offer in Compromise Package should be completed to file an offer in Compromise with the IRS. Included with the Form 656 software are Form 433-A, Collection Information Statement for Wage Earners & Self-Employed Individuals and Form 433-B, Collection Information Statement for Businesses .

  • You may need to complete the appropriate Form 433 and should be prepared to provide other documentation and explanations as they are requested.
  • Various options are available for accepted Offers in Compromise requests, such as a reduced total payment and scheduled monthly payments.
  • Defaulting on an accepted offer in compromise can result in the IRS filing suit against you and reinstatement of the original tax debt, plus interest and penalties.

Can I get an extension of time to pay my tax?

An extension of time for payment of tax can be filed with the IRS on form 1127 : lotion for Extension of Time for Payment of Tax, but the legal requirements are stern :

  • Form 1127 must be received by the IRS on or before the date that the tax is due.
  • You must provide a complete statement of all your assets and liabilities at the end of the last month, and an itemized list of money you received and spent for the three months immediately prior to sending in the extension to pay request.
  • You must demonstrate that paying the tax when due would result in undue hardship; simple inconvenience is not enough of a hardship to qualify.
  • You need to show that paying the tax when due would result in a substantial financial loss and that you don’t have the cash, or can’t raise the money, by selling property or through borrowing.

When approved, extensions to pay are by and large limited to six months. Plus, the IRS requires some acceptable kind of security before granting an extension of meter to pay. The security may be in the form of a bail, poster of spleen, mortgage or other means, depending upon individual circumstances .
There are times when extensions are granted specially due to federally declare disasters. You can check for extra easing information on the IRS Disaster Relief page .
Remember, with TurboTax, we ‘ll ask you elementary questions about your liveliness and help you fill out all the correct tax forms. With TurboTax you can be convinced your taxes are done right, from simple to complex tax returns, no topic what your position .

source : https://www.peterswar.net
Category : How

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