What Will Happen If You Can’t File Your Tax on April 15?

Tax TimeTax time is upon us again just as it is every year making our thoughts of warmer weather and upcoming spring break vacations turn to thoughts of taxes, paperwork and the IRS. It doesn’t have to be such a dreaded time of year for us though as understanding the tax system and how it relates to our income will make tax time a little easier and a lot less stressful.

You may have thought about putting off your taxes until last minute again this year; don’t feel bad, a lot of people do just that each and every year and then struggle at the last minute to file their taxes and pay their tax bill on time. If you do this, you are not alone; millions of Americans do the exact same thing year after year and a large percentage of that group file their taxes beyond the tax deadline.

If you are one of the select groups of people that file late for whatever reason, this article is for you. You will learn what happens if you decide to file your taxes late or don’t pay your tax bill on time. Will the IRS really come after you? Will they take everything you have the way they do in the movies? The answer to both of these questions is a yes and a no. The IRS is very serious about getting their money, but likewise, they are also willing to work with you and help you get back on track and pay down your tax debt.

There are a number of scenarios that might cause a person to not file or pay their taxes and we will go through some of them and let you know what to expect if these examples fit you:

You Missed the April 15 Deadline

If this is you, you might still be in good shape. Filing late will incur a 5% penalty based on the amount you owe; this penalty will max out at 25% depending on when you file. If you wait too long, let’s say more than 60 days, this penalty goes up to 100% of your tax bill or $135, whichever is less. The best thing you can do in this instance is to ask for an extension which will give you an extra 6 months allowing you to get the money together and pay your tax bill before receiving penalties. You may also want to consider using your credit card to pay off your tax debt. Having a small interest fee is much better than having the IRS breathing down your neck.

You Filed on Time But Haven’t Paid Your Tax Bill Yet

You will still incur some penalties from the IRS but they will be much less substantial. A small fee if 0.25% per month is added to your tax bill as long as you make arrangements with the IRS in advance. These installment plans may be nice, but they still add fees to your tax bill that you wouldn’t otherwise have to pay if you paid your tax bill in full when it was due. Sometimes a tax bill can be an untimely expense, but paying it off right away will save you money in the end. Again, consider using your credit card to pay your tax bill, this will save you money on fees and interest rates also.

You Didn’t File Your Taxes or Pay Your Tax Bill

Now we are getting into serious territory here; not filing your taxes or paying your tax bill could become a very big headache for you and your accountant. You will receive penalties for both transgressions including a 5% failure to file fee and a 0.5% late filing fee. Besides those fees, you will also incur an additional $135 fee or 100% of your tax bill, whichever is less if you pass the 60 day mark. Factor in the 3% daily compounding interest charge and your new tax bill could be financially devastating. Don’t let these fees ruin you, file your taxes and pay your tax bill on time; doing so will save you money and a lot of stress in the long run. Setting up a payment plan through the IRS is another way to alleviate the stress of a tax bill and doing so, will ensure that you get to keep your possessions and not file for bankruptcy. You can even use your credit card to set up the payment plan so you don’t have to think about it every month or risk making a payment late which could cause the IRS to cancel the payment plan altogether.

Although some of these examples may be extreme, they still occur every year during tax time and the IRS is willing to work with those who act now. By offering to pay what you can and set up a payment arrangement using a credit card, you will avoid the IRS garnishing your wages, bank accounts, Social Security benefits or even your retirement income. Taking action now is the best way to handle your tax problems; don’t wait until it’s too late.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

We will be happy to hear your thoughts

Leave a reply

NHBS Inc © 2024

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

NHBS Inc © 2022

NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

Privacy Policy Terms of Use

Business Loans

Consumer Loans

New Horizon
Logo
Enable registration in settings - general