We all forget things sometimes. Maybe an anniversary has slipped our minds; we have forgotten where we parked the car or left our wallet at home. But, what happens if you fail to do something more substantial like forgot to file taxes? Your first reaction to the situation may be to panic and then panic some more, but a better option is finding out what you need to do now to minimize the damage. Here we will explain what happens when you realize I forgot to file my taxes.
Just in case you need a reminder, Tax Day is on the same date every year, April 15, so make a note in your calendar or do whatever it takes to make sure you remember the date next year. As you know the date when you are due to file your taxes, it is better to prepare in advance to make sure you file on time every year without fail. Once you have missed out on filing one year, you may feel nervous about filing the next year and try to delay as you are worried about how much you owe and concerned about fines. But, trying to ignore the problem by delaying your filing will only make things worse. As soon as you realize that you have forgotten to file and missed Tax Day, it will be better to get on and file your taxes as quickly as possible.
If you delayed filing your taxes, hoping that you would have more time to pay, you are out of luck, sadly. Regardless of when you file your taxes, the deadline to pay remains the same; you will have less time between submitting your taxes and needing to pay what you owe. The bad news is the longer you take to file your taxes, the more you will pay in penalties, so if you are past the deadline and still haven’t filed, do it now before you owe even more in penalties.
Once they have gotten over the panic of not filing their taxes, most people start to worry about the penalties they will face. Read on to find out what you need to know about tax penalties.
The first thing to know is that failure to file your taxes and failure to pay your taxes carry separate penalties. But, failing to file has a more significant tax penalty than failing to pay your taxes.
When you fail to file, your penalty will increase with each month that passes until you do file. For every month beyond April 15, you will accrue a fee of 5% of the taxes that you owe. This increase of 5% per month stops rising once you reach the point where your fees equate to 25% of your owe’s taxes.
If you delay filing by more than 60 days past the due date, you will be required to pay a minimum penalty. The minimum penalty equates to $210 or 100% of the tax that you owe, and you will be required to pay the lesser amount of these two figures. This additional penalty is another good reason to file your taxes as soon as you can after missing Tax Day.
Can IRS Penalties be Waived?
After reading about IRS penalties, you may wonder if there is any way they can be waived. The IRS can make exemptions for late filing. Only in specific circumstances will you need to check to see if you fit into any of the categories that could be eligible for penalty relief. If you qualify for IRS penalty relief, you will not receive a replacement on the interest you owe, and this will continue to accrue until you have fully paid your tax bill.
Lessons Learned for Next Tax Day
After missing Tax Day once, the chances are you won’t be in a hurry to make the same mistake again anytime soon. To ensure that you don’t find yourself in another stressful situation next year, it is best to learn lessons from this year and begin tax planning for the next year.
Try to keep track of relevant documentation throughout the year so that you don’t need to panic next April. You may also want to check that you feel confident in filing your taxes and know precisely what to do so that it is a far less stressful task next year.
If you are worried that you are not going to make the filing deadline as you edge closer to next April, then it is better to take action fast. You can apply for an extension on your filing using an Application for Automatic Extension of Time to File form. Successfully submitting the form could give you an automatic six-month extension on filing your taxes. The form needs to be submitted before the filing deadline. It is vital to note that you will still need to pay the taxes you owe before their due date to avoid penalties, even with an extension of time to file.
If you find that you struggle to get the money together to pay the tax you owe every year, you may want to start to plan ahead for payment too. Calculating an estimate of how much you believe you will owe and then saving this money up throughout the year should help to minimize the shock when your final tax bill comes through.
To summarize, here are the key points to remember:
- Always plan ahead for April 15, aka Tax Day, to prevent you from forgetting.
- If you believe that you are going to be late filing, you should apply for an extension of time to file before Tax Day.
- You will be subject to penalties if you file your taxes late and if you pay your taxes past the payment deadline.
- The longer that you delay filing your taxes past the deadline, the more penalties you could face.
It is never a good idea to approach complex financial decisions without sound advice from a team who understands the choices you’re weighing therefore we are here to assist you when it comes to tax debt relief and keeping the IRS out of your life. If you need help filing taxes or are behind on taxes our team of tax professionals can assist you with getting your taxes in order. Schedule an appointment today by phone or email.