Even though filing federal and state taxes each year is mandatory, there is no system currently in place that automatically files tax returns on your behalf.
It is considered your obligation to file taxes each year by the April 15 deadline, properly report and calculate income earned, claim tax credits and deductions, and provide the correct information for receiving a tax refund (if applicable).
If you missed the April tax deadline, or have deliberately avoided paying taxes in the past, you must settle your disputes with the IRS before they come down on you hard with penalties, fines, and sanctions.
Reporting Your Taxes to the IRS
Even if you are worried about how you will pay back money owed to the IRS, the worst thing you can do is ignore the problem altogether.
The federal government can impose penalties on taxpayers who fail to file a tax return or fail to pay back tax debt.
Here are some important things to consider:
- The failure-to-file penalty is traditionally higher than the failure-to-pay penalty, so you should file on time regardless of financial circumstances.
- The penalty for filing late is typically 5 percent of the unpaid taxes for each month the tax return is late. The penalty begins accruing the day after the deadline but will never exceed 25 percent of your unpaid taxes.
- The failure-to-pay penalty is traditionally half of the one percent of unpaid taxes. The penalty also begins accruing the day after the deadline.
- Taxpayers may file for a tax return extension. However, you must make sure the request is filed timely and long before April 15. It can prevent you from having to hand the IRS more money for failure-to-file.
- Taxpayers may also avoid paying the late penalties if they can demonstrate reasonable cause for not doing so.
Important Points to Consider
You should file your tax return on time each year. You may reduce additional interest and penalties by paying off as much tax debt as possible at the time of the return and then reaching an installment agreement with the IRS afterward.
Other suggestions for taxpayers to remain in the good graces with the IRS include:
- File and pay your taxes as soon as possible. Do not wait until the last minute to file.
- File electronically because it is the easiest, safest, and most accurate way to determine tax liability. You can also expect to receive your refund much sooner, especially if you selected direct deposit as your refund method.
- Enter into an installment agreement with the IRS if you can’t immediately afford the tax debt. The terms of the agreement are flexible and low interest. It is designed to support those in financial need who need patience from the IRS without getting hounded by additional threats.
Filing Taxes Is Your Responsibility
Even though it is the law that you pay applicable taxes to the U.S. and state government, you have the responsibility of making sure the taxes are filed and filed correctly.
If your tax debt has prevented you from filing returns in the past, know that it is not too late. You can get back on track with the IRS and enter into a reasonable agreement, which can save you from threats of IRS seizures and tax liens in the future.
Contact Levy & Associates to find out how we can help you. We have dealt with many individuals struggling to deal with tax debt and are far more understanding and sympathetic to your situation compared to the IRS. Visit us online at www.levytaxhelp.com, or call 800-TAX-LEVY for more information.