The last day to request for an extension in filing your taxes in Nashville was May 17. If you haven’t filed your taxes and missed the deadline, it’s best to call your CPA immediately and get guidance on what to do next.
The IRS does not take nicely to taxpayers who fail to file and pay their taxes on time. You need to have a very good reason or a “reasonable cause”, such as a natural disaster of getting incapacitated, for not meeting your tax obligations within the annual deadline.
Outside those causes, not filing and paying your tax returns is considered a criminal offense which might get you jail time of one year for every year you failed to pay your taxes.
That said, you can avoid a stiff punishment by filing your returns even after the deadline. While you can avoid going to jail, however, you have to face penalties and interests for late payments.
How much will a late filing cost you?
You could get penalized for both failing to file and failing to pay your taxes on time.
The penalty for late filing is 5% of your tax dues for every month or part of the month that you’re late. The total penalty will not exceed 25% of the unpaid taxes, which is determined by deducting any withholding tax, your estimated payments, and any refunds due to you from the amount you owe.
If you’re late for more than 60 days, you could be charged at least $435 or 100% of your tax dues, whichever is less.
On the other hand, failing to pay your taxes on time is penalized with an interest rate of 0.5% of the unpaid amount per month or part of the month. This can go up to 1% after the IRS has informed you of a final notice to seize property. If you make an installment payment settlement with the IRS, the rate is only half of the standard, or 0.25%.
How can a CPA help you at crunch time?
Your CPA can help you with the following:
- Calculate how much penalty and interest you may have to pay
Your CPA will most likely advise you to file your taxes on time even if you can’t pay them in full to avoid the stiffer penalty for not filing. Your CPA can look at your finances and help you determine the most reasonable amount you can afford to pay by the deadline so you can minimize your penalties for late payments.
- File a request for extension
If it’s clear that you will not be able to meet the deadline, your CPA can file a request for extension.
- Help you with your payment options
If your funding options are limited, your CPA can help you determine your options, including your eligibility for the IRS Individual Payment Plan.
- Help you proactively so you don’t miss the deadline
Your CPA can send you reminders about deadlines and request for your financial documents as early as possible so they can work on your returns in a timely manner.
- Help you determine if you’re due for a refund
If you’re getting a refund, you will not be penalized for late filing and payment.
See your CPA today if you missed the deadline and learn about the best options for you.
Sources:
Why You Should Hire a CPA, BusinessNewsDaily.com
Why Small Businesses Need a CPA, TheBalanceSMB.com
Why You Need an Accounting Firm When Starting Your Small Business
