Don't miss the tax deadline | 17 October 2022
“A person doesn't know how much he has to be thankful for until he has to pay taxes on it.”
In general, the IRS may impose a failure-to-file penalty if you miss the filing deadline or fail to file by the tax extension deadline. The IRS charges 5% of your taxes due for each full or partial month your tax return is not filed, and the penalty is based on your unpaid taxes. However, the IRS is only permitted to charge you a maximum of 25% of any unpaid taxes.
It's crucial to be aware that the IRS won't impose a late filing penalty if you anticipate receiving a tax refund and haven't yet filed your tax return. However, you should think about consulting a tax expert before filing if you believe you might be subject to penalties for filing your tax return late. It's possible that you'll have to pay penalties and interest.
How to file a Federal Income Tax Return?
On January 24, 2022, the IRS started receiving and processing federal tax returns.
You must first ascertain how much money you earned in 2021 in order to begin filing your tax return.
Next, you must choose whether to itemize your return or take the standard deduction.
How to File a Tax Return: Steps
Assemble your documents, such as:
W-2 documents from all employers
Statements of additional earnings and interest (1099 and 1099-INT forms) if you are itemizing your return, receipts for business and medical expenses as well as charitable contributions.
Select the filing status you want. Your filing status is determined by your marital status. Your filing status is also impacted by how much of your income you allocate to living expenses.
Choose the tax filing method you want to use. For the simplest and most accurate returns, the IRS advises using tax preparation software when filing electronically.
Decide whether you are itemizing your tax return or taking the standard deduction.
Learn how to pay your taxes if you owe money, including how to request a payment plan, if you do.
What Happens If I Can't Pay My Taxes?
Despite the fact that paying as soon as you can is always a good idea, there are some situations in which you will simply be unable to do so. If you are unable to pay in full, you have the following options.
1. Plans for quick payments.
If you're eligible, you have 180 days to make the full payment. Requesting this payment option is free, but payments and interest may increase until your taxes are paid. If your total debt, including interest and penalties, is less than $100,000, you are eligible to apply online. Using the IRS's online payment agreement form or by calling 800-829-1040, you can create a payment schedule.
2. Payment plans on a monthly basis.
These options, also known as long-term payment plans, let you pay your taxes in a series of equal monthly payments. If your debt—interest and penalties included—is less than $50,000, you are eligible to apply online. From $31 to $130 is charged for setup. Your ability to pay that fee may or may not depend on your income.
3. An unforeseen collection delay.
If you are unable to pay your tax debt, the IRS may temporarily postpone taking action. The "Collection Information Statement" (Form 433-F) may be required in order to make this relief request. Also required is financial documentation. It's important to understand that interest and penalties will keep adding to your balance.
If you have any questions or are still worried about it, you can always schedule a coffee chat with us and we will help settle things for you.
Yours in Trust,
Kotini & Kotini