Tag Archive for: Tax Deadlines

If you’ve missed the official deadline to pay your taxes, don’t stress. Getting back on track with your taxes is, in many cases, simpler than most people think.

Whether you owe individual taxes or taxes for your small business, the easiest solution is to pay your taxes as soon as you can. At Milikowsky Tax Law, we realize it’s not always that simple — and we’re here to help you navigate your late taxes.

When creating a plan to pay taxes owed after missing a deadline, it’s important to consider the ramifications of what might happen if you don’t meet your payment obligations. In addition to interest building up on what you owe, your social security benefits, ability to secure a loan, and tax refund can be impacted.

Read on to learn what to do to start resolving your tax debt as soon as you can.

Due Dates

Before we discuss what to do if you’ve missed a deadline, make sure you know for certain when your taxes are due.

For businesses in California, the deadline to file your state taxes will depend on when your fiscal year begins. Most business returns are due by the 15th day of the third month of a company’s fiscal year — so for example, if your fiscal year begins on January 1, your California state taxes will be due on March 15. Dates for tax extensions vary depending on the business. Check the state’s tax website for more details.

What to Do If You Missed the Due Date

If you’ve missed your deadline, it’s important to take action right away to get back on track. As mentioned earlier, the best thing you can do is to pay your taxes as soon as you can. Before you do that, it’s important to take a few basic steps.First, gather all of your tax and income documents. Find your past W-2s, W-9s, 1099s, or other tax statements and filings. The IRS or your employer will be able to provide you with copies of any missing statements.

Next, meet with an experienced tax attorney to discuss your repayment options. Though you may be eager to pay back your taxes as soon as possible, it benefits you to take the time to go over your tax situation with an attorney, who can offer counsel and help fill any missing gaps in your documentation. A tax attorney will advocate for you to the IRS, in order to help secure your best repayment plan.

There are a few different options for settling your tax debt, depending on your situation. If you don’t want to (or can’t afford to) pay your entire amount owed all at once, the IRS allows for payment arrangements for a maximum of 72 months and $50,000 or less owed. This can be done through the IRS Form 9465. If you owe less than $10,000, your request will likely be approved automatically.

If you owe more than you can pay, you may qualify for an offer in compromise, which allows the taxpayer to settle with the IRS by paying less than what is due. The IRS will look at your ability to pay, income, taxes owed, and the value of your assets to determine whether you qualify and what your settlement and payments will be.

For more challenging situations, you might consider the IRS’ “Currently Not Collectible” program — if you qualify for this, the IRS will wait one year before coming to collect your debt. This can give you and your tax attorney more time to make a case to file an appeal. In worst-case scenarios, bankruptcy may be an option for you; be sure to discuss with your tax attorney to determine whether you qualify.

Possible Penalties

If you do not pay or fail to meet payment obligations you agreed on, the IRS will charge you a failure-to-pay penalty and interest on your taxes owed. This will only drive up your total amount owed, potentially by a significant amount.

Your delinquent tax status will also be reported to financial institutions, making them less likely to loan you cash for a home, car, or your business. In extreme cases, liens and levies can be filed against you.

For those who are self-employed, it may also impact your Social Security benefits. If you fail to pay your taxes, your self-employment income will not be reported to the Social Security Administration, meaning you will not receive any money toward retirement or disability benefits.

If you fail to pay your business’ taxes, you may have your seller’s permit revoked, making illegal to operate your business — if you were to continue operating your business without this permit, you’d face a fine of as much as $5,000 and up to a year in prison.

The penalties can be serious, especially for a business owner, but you can minimize your risks by working with a legal professional who can advocate on your behalf. It’s always your best choice to consult a dedicated tax attorney when you’ve missed your tax deadline, to help you make your case to the IRS and get the best possible results for resolving your debts.

W-2

IRS has extended the deadline for personal tax filings from April 15 to July 15. It has also extended the deadline for contributing to your 2019 IRA. So, if you have not contributed, you still have time.

Trying to decide whether or not to contribute to your IRA?

Consider how much of an impact the economic shutdown has already had on your finances.

If you are among those who lost their primary source of income—whether from a job or a business—this may not be the time. Instead, it’s time to focus your energy and your resources on taking care of yourself and your family. You need to bridge the gap until you know how you’ll stabilize your income and start to rebuild.

But if you still have financial stability, from a job or a business, think about maintaining the momentum of regularly contributing to your IRA. It’s a pillar of a secure retirement.

Here are some other steps you can take to make the most of this deadline extension:

  1. If you’re getting a refund, go ahead and file.

Even with the extra time, taxpayers should still be collecting paperwork and preparing to file their returns. Those who are expecting a refund probably should file as soon as possible, as the IRS is still processing returns and issuing checks.

If you are expecting a refund, you’re likely to get it faster if you file your return electronically and opt for direct deposit.

  1. If you expect to owe taxes, don’t put it all off.

For taxpayers who expect to owe, the extra time allows for more time to collect the necessary funds. But try not to put off tax-related things altogether — the best way to pay taxes at any time is in small increments over several months. Talk to your accountant about the possibility of setting up a payment plan to help you budget.

  1. Check when your state return is due, too

Depending on where you live, you might still have to pay taxes owed to your state by April 15, or a different listed date. For example, California has pushed its deadline to July 15. The American Institute of Certified Public Accountants is keeping a list of the deadline changes by state.

  1. Be patient with your tax preparer.

Tax preparers are dealing with the similar stresses many Americans are facing in light of the pandemic. Many are working from home, and now they’re also figuring out how these last-minute changes affect their clients and the mechanics of tax filing.

“Just be cognizant of using secure methods of providing personal documents to your tax pros. Most should have secure methods of receiving documents,” says Matt Keefer, a certified public accountant and director of tax services at accounting firm Gorfine Schiller Gardyn in Owings Mills, Maryland.

For more information about the details of this tax deadline, visit our blog.