What to do if you have not filed your income tax return
Whether you simply forgot to file your tax return or decided not to do so because you were unable to pay your taxes, it is important that you file your past due tax return as soon as possible. The Internal Revenue Service will start to assess penalties or fines for every month past the original due date that you do not file your return. The following should help you understand what you need to do if you have yet to file your annual tax return.
Steps to Take When You Haven’t Filed Your Tax Return
If you haven’t filed your tax return, the only way that you can avoid paying fines once you do file is if you submitted a filing extension with the IRS. This extension gives you an additional 6 months to file your tax return, but you needed to file the extension before the original tax return due date.
In the event that you didn’t file your return by the initial due date, a failure-to-file penalty will be assessed unless you can provide the IRS with a valid reason why you didn’t file on time. If you did not file on time but paid the taxes that you owed timely, you may be able to avoid the failure to file and failure to pay penalties all together.
A failure-to-pay penalty can be assessed if you did not pay your taxes in full. If you paid only a portion of the taxes that you owed, the penalty will be a certain percentage of your remaining balance. For any taxes that you have yet to pay, interest will be charged. This interest is in addition to the total amount of penalties you are expected to pay.
If you are currently owed a refund, a failure-to-file penalty will not be assessed. On the other hand, it is possible that you could lose your total refund if you don’t file your return on a timely basis. To receive a refund, your return must be filed within three years of the due date of the return or 2 years from the date of overpayment. If the statute of limitations passes, you will not be able to obtain your refund.
Before you file your late tax return, it is recommended that you calculate how much the failure-to-file and failure-to-pay penalties will be. The failure-to-file penalty is currently set at 5% of the total amount you owe for every month following the original due date. Example: The original due date was May 17, which means that your failure-to-file penalty would be 5% if you filed before June 17. A penalty limit is set at 25% of your total tax bill.
As for the failure-to-pay penalty, the IRS assesses the penalty at 0.5% for every month after the initial due date of the tax return. If you owe $2,000 and filed your return 20 days late, your tax bill would increase by $10. A 25% penalty limit has also been set for the failure-to-pay penalty.
What to do If You Owe a Balance
When you are getting ready to file a past due tax return, there are a couple of options at your disposal for any unpaid balance. The first and best thing you can do is pay all of your remaining balance which ensures that the interest doesn’t continue accruing. However, it may not be possible for you to pay all your remaining balance. In this situation, you may want to apply for an IRS payment plan to alleviate your tax problem. These plans allow you to pay your balance over a certain period of time. You have the option of applying for a short-term payment plan or a long-term payment plan.
If you have yet to file a tax return, you should file as quickly as possible. The fines associated with not filing are much higher than the ones that occur if you can’t pay, which is why it’s best to file the return even if you can’t pay all of your taxes at this time.
LNK Tax Group has one of the best past due tax return services in Santa Clarita and Downtown Los Angeles, California. If you are in Santa Clarita or Downtown Los Angeles and wish to learn more about our past due tax return services, please call 661-491-7222 or 213-588-1120 or you can book a free consultation online. We provide past due tax return services to individuals and businesses in Downtown Los Angeles and Santa Clarita including, Valencia, Stevenson Ranch, Newhall, Castaic, Canyon Country, Agua Dulce, Saugus, Rancho Santa Clarita, Sylmar, Mint Canyon, Val Verde, Mission Hills, Castaic Junction, Granada Hills, Porter Ranch, San Fernando Valley, and Los Angeles County.