Last Minute Tax Tips for Late Filers
As tax season draws to a close, millions of Americans scramble to get their documents together and file their taxes before the deadline. Tax procrastination is a national pastime, so don't feel as though you're the only one going through this rushed, stressful, process. Here are a few last-minute tax tips to help late filers get through the process unscathed.
E-file Your Taxes
Electronic filing (e-filing) increases every year, primarily because it offers ease of use and quicker returns for tax refunds. Tax refunds are typically issued about two weeks after a taxpayer files an electronic return. In 2020, more than 150 million Americans filed their taxes online, using commercial software or the IRS website's filing page.
E-filing reduces the chances of math errors because the software does most of the math for you. E-filing also lowers the cost of paying for return receipts at the post office, saves time waiting in line, and the hassle of making photocopies of your return.
Filing for an Extension
For tax procrastinators, one of the best tax tips is to file for a six-month extension. As long as you submit your request for an extension before April 15, you are generally given a six month reprieve to file a return, or until about October 15.
However, while you get an extension to file taxes at the last minute, it is not an extension to pay your taxes. If you owe taxes that money is still due on April 15 and non-payment of taxes subjects you to penalties and interest until you pay. Pay the estimated taxes due by the tax deadline and an extension gives you extra time to go through the filing process.
If You Can't Afford Your Taxes
If you're waiting until the last minute because you're afraid you won't be able to afford to pay what you owe, you may have other options. You may be able to contact the IRS for a short-term payment plan to get a temporary extension of your tax liability for up to 180 days. However, you should contact the IRS as soon as possible for a payment agreement.
If you pay a majority portion of your payment, it can help in two ways. First, it reduces the amount of penalties you will be assessed for interest and late payment of taxes. Second, it is a good-faith showing to the IRS that you are serious about paying your taxes and are not trying to avoid liability.
Credit Card Payments
Making a credit card payment may be tempting but you need to check your credit card interest rates. Paying your taxes by credit card may also add processing fees that could make it more expensive. On the other hand, if you just need to use the credit for a few months and can pay off your credit card in full before too long, credit cards can make sense.
Dealing With Late Payment Penalties
If you fail to file your taxes, you may be assessed a failure-to-file penalty. If you do not pay your taxes by the due date, you will be assessed interest and could face a failure-to-pay penalty. The failure-to-file penalty is generally 5% of unpaid taxes per month, up to 25%. The failure-to-pay penalty is generally 0.5% for each month the tax. This is all in addition to interest on the unpaid taxes.
Help With Tax Issues
As you can see, the penalties for not filing your taxes can be crushing in addition to the taxes you already cannot afford. So be sure to at least file your taxes on time, or file for an extension. An extension to file does not give you more time to pay your taxes, so make as much of the payment as you can by April 15.
If you need more time to pay the total amount, you can arrange a payment schedule with the IRS. If you want legal tax advice or help negotiating with the IRS, you can contact an experienced tax attorney for advice for your situation.
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.