The thought of owing late taxes can be terrifying if you’ve never dealt with the IRS before. If you just realized that you forgot to file taxes by the tax deadline, you may even be expecting the IRS to show up on your doorstep. But how worried should you really be?
You don’t have to panic if you’ve forgotten to file your taxes, but you do need to act quickly. Every day that you sit on this problem is one more day for the consequences of not filing or paying taxes to pile up! If you’re unsure about what to do to catch up with the taxes you owe, get expert help with tax preparation to get things moving before you run into bigger problems. Let’s cover the steps you should be taking if you’ve skipped a tax deadline.
What You Need to Know After Missing a Tax Deadline
What happens if I forgot to file my taxes? If you forgot to file taxes last year, you are not out of options. The IRS and your state tax agency want you to get up to speed with your unfiled returns.
The first order of business is to confirm that you were required to file a return for the tax date that has passed. You may not be required to file if you made below a certain threshold for the year, but you may still want to file to see if you qualify for any tax credits. If you are required to file, just file your state and federal taxes using forms for the year you missed. You should also be prepared to pay any money that you owe. If you’re unable to pay what you owe in full, you can explore payment options that will help you to avoid IRS interest and penalties.
Not everyone owes tax money. You may actually be getting a refund even if you filed late. However, you can’t wait too long; you only have three years to file before the IRS keeps your refund. You can also lose your ability to claim tax credits if you don’t file soon.
In short, you won’t receive any refunds until you’re fully caught up with all returns.
The IRS Might File Your Tax Return for You
Most people don’t realize that the IRS actually has the right to file your tax return on your behalf. This is far from a courtesy, though. Using something called a substitute return, the IRS will file your taxes for you without adding in tax credits, giving you the “worst deal” as the default by only using the standard deduction and one exemption.
They do this using information gathered from W2 forms, 1099 forms, and third-party sources to identify your income for the year. You will have a 90-day window to dispute what the IRS claims you owe in taxes based on their assessment. However, the IRS can move forward with collection efforts based on their tax assessment if you don’t respond during that window. Call a tax expert if you feel stuck!
Does the IRS Charge Fees for Late Taxes?
Yes, the IRS begins charging fees if you miss your filing deadline for taxes. The first fee is something called the failure-to-file penalty. The total that you’ll be charged if you allow this fee to accumulate is between 5 and 25 percent of your total tax bill. That fee jumps to a maximum of $135 if you still haven’t paid your tax bill 60 days after the deadline.
Bear in mind that these fees are actually the least of your worries if you’re allowing a tax bill to go unpaid. The IRS can come after you with liens, levies, and wage garnishments to try to collect what you owe. Failing to cooperate with the IRS can even lead to criminal prosecution in some cases. The good news is there’s really no need to let it get to that place when the IRS offers so many options for debt payments and forgiveness.
What Happens When You Forget Something on Your Taxes?
Sometimes you make an honest mistake. For example, it’s not uncommon for people to forget to complete a 1099-R. If you forgot to claim 401k withdrawal on taxes, you can go back and fix the mistake using something called an amended return that you can mail to the IRS. The IRS will need to see the amount you omitted from your original return because it could change your amount of taxable income for the year.
If you have several income streams, you may realize that you forgot to file a W2. You will need to file an amended return that documents the income on the unfiled W2 if you’ve forgotten to file. The process will require you to go back and recalculate your new adjusted gross income for the year with the new total that includes your missing W2. You may have to also submit amended versions of other forms if they are impacted by your new W2 totals.
For most people, the benefit of getting that missing W2 in as quickly as possible is that you’ll be getting a refund back. If you end up owing money, amending your W2 promptly may save you from fees and penalties.
The Best Strategy: File Even Though You Can’t Pay What You Owe
If you failed to file your taxes by the deadline because you didn’t think you could pay what you owe, it’s time to develop a better strategy. The IRS will know what you earned for the year even if you don’t file your taxes. They use sophisticated software that compares employer records with worker records to track who isn’t paying taxes. That means that the IRS will be contacting you if you didn’t file. It’s better to simply get ahead of the situation by filing if you can’t pay what you owe in taxes. This will enable you to work with a tax professional to apply for relief options like an Installment Agreement (IA), Offer In Compromise (OIC), Currently Non Collectible (CNC), and more.
Who Can Help After I Forgot to File My Taxes?
If you forgot to file taxes last year, you have more options than you realize! At Tax Group Center, our team of tax professionals helps people get their late taxes filed every day. We’ll help you work with the IRS to get a clean slate. Let us help you find what you need to get your late taxes filed as quickly as possible. If you’re unsure about how many years back you need to go with catching up on late taxes, we can help you get a copy of your tax records to see how far back you need to file. If you’re dealing with potential tax debts, we’ll help you explore relief options. We want to help you handle every step the right away to avoid time-consuming, expensive penalties. If you forgot to file taxes, reach out to the Tax Group Center today!