Q AND A: WHAT TO DO IF YOU HAVE NOT YET FILED YOUR TAXES!
April 8, 2011
Q: What happens if someone owes money for their 2010 taxes and they don't have the money by the due date?
A: You should still file your return. If you don't file your return you will incur even more penalties and interest compared to filing the return and owing taxes. This year the final date to file your return is April 18th.
Q: If you file your return and don't have the money to pay the tax owed what happens?
A: If you file the return and owe money and can't pay, the IRS will send you a bill for the balance due and you will still owe interest and penalties but not as much as if you don't file a timely return. If you can't file your return in time, file a form 4868 and you will get an automatic extension for six months to file your taxes until October 17. You will still owe the taxes by April 18th so you will still owe interest and penalties but it will be less than if you don't file the extension.
Q: Will the IRS give people any extra time to pay taxes?
A: Yes. There are three options that might be helpful
•1. Go on the IRS web site and click on "apply for an online payment agreement" and fill out the form and the IRS might give you an extra 60- 120 days to pay the full tax. Penalties and interest might be less compared to paying over a longer period with an installment agreement.
•2. Enter into an Installment agreement to pay taxes with the IRS. You do this by filing an IRS form 9465 or go online and you can enter into an agreement to pay your tax bill typically over a 60 month period. You will still owe interest on the late payment and still might be charged a late payment penalty, but the total cost will be less than ignoring the issue and waiting for the IRS to catch you.
•3. The IRS takes credit cards and debit cards. So you can use your credit card to pay the IRS and earn frequent flyer points at the same time. The IRS does not charge you to use a credit card or debit card. But the credit card company will charge you a fee so check into the costs of this option.
If you have a large tax bill that you can't pay, you should probably sit down with an accountant, an enrolled agent or an attorney who can help you. Please contact us for more information.
Copyright © Budish, Solomon, Steiner & Peck, Ltd. This article may be reproduced with proper attribution to the law firm of Budish, Solomon, Steiner & Peck, Ltd.
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