While taking a breather is okay, you’re still not out of the woods yet, my friend.
Your extension may have given you more time to successfully file your tax return, but it doesn’t give you any more time to pay the estimated tax liability you calculated when filing your extension. So, lace up those boots, grab that ax, and make our way to the clearing by paying these taxes.
FACT: For each month or even part of a month your tax return is late, the IRS can charge a penalty of 5% of your unpaid taxes up until you’ve paid 25% of your total unpaid tax. If you happened to be more than 60 days late, you’re looking at paying, at the minimum, $135 or 100% of your total unpaid tax depending on which amount is smaller.
By filing an extension, you dodged this bullet. But the IRS still expects a payment regardless of tax documentation or preparation. Now, your goal is to make an estimated tax payment as soon as possible in order to avoid costly penalties and interest.
“But I can’t pay on time.”
FACT: By filing on time, but not paying on time, the IRS can charge a penalty of just 0.5% of your unpaid tax for each month it’s late.
Just because you think you can’t pay on time doesn’t mean that you shouldn’t file at all. But you already knew that, which is why you filed an extension. Anyway, you’ll want to pay what you can; otherwise, the IRS could opt for more drastic measures like garnished wages, court appearances, or even prison time. If that wasn’t enough motivation, even if the IRS owes you money, you won’t get it until your taxes are completed.
FACT: Until your returns are filed, the 3-year Statute of Limitations period for the start of an IRS audit never begins.
You can’t be looked at by the IRS until your taxes have been completed. And, in this case, or any case for that matter, that’s not good at all.
For example, your delayed taxes of 2013 could be the reason of an audit back in 2010. To make matters even worse, you may have to still pay interest and penalties if the IRS finds you owed in 2010.
“Are there any ways to pay?”
With all this talk of penalties and consequences, you probably feel trapped in the thick of the woods. Fear not, the clearing is closer than you may think.
FACT: The IRS offers payment plans including a short term extension to pay and long-term installment plans.
You can set up a monthly repayment plan by submitting a Form 9465, Installment Agreement Request, to the IRS. What makes this form your mightiest of axes is that it allows you to make your own monthly amount and repayment terms.
For owed amounts less than $10,000 and a repayment period of 36 months or less, approval is automatic; debts less than $50,000 can be processed and completed online and, for debts greater than $50,000, additional forms and documentation must be submitted. Visit IRS.gov for further details.
Out of the thicket and into the clear, no matter how you work with the IRS, it’s best to file the right forms and show good faith towards paying your taxes. If you have yet to file an extension for your tax return, ExpressExtension makes e-filing simple and quick. By e-filing with ExpressExtension, you can also pay your estimated tax due at the same time; payment is accepted online by Electronic Funds Withdrawal (EFW) using your checking or savings account information.
For any assistance in e-filing your extension, call, email, or chat with our live professionals.
Phone: (803) 514-5155 (Monday-Friday, 9am-6pm Eastern Standard Time)
Email: [email protected]
Live Chat: www.expressextension.com