Taxes 101

  • Filing taxes late and why this should be avoided at all cost

    Filing taxes late is not the recommended way to manage a tax liability because it will always cost a person more than when filing timely. We understand that there are circumstances that can prevent taxpayers from filing forms or making tax liability payments on time. Large tax payments due can be a surprise, especially when a taxpayer prepares his or her tax just days before they are due in April.

    The Proper Way to File Late (file tax extension)

    1. Download a copy of the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return

    Fill it out. For help, chat with us. Mail it to the IRS.

    A taxpayer can request an extension to file. This extension request must be filed with the IRS prior to April 15. The IRS will automatically grant such a request if filed correctly. Successful filing of this request and approval by the IRS will extend forms and paperwork deadline to October 15. Please note, a filing extension does not extend the deadline to pay tax liability. A taxpayer must still pay an estimated amount of tax liability.

    If You& The Penalty Is
    File an extension with a payment No Penalty: Worry-free tax preparation due October 15, 2014
    File an extension WITHOUT payment 2014

    And a full return on October 15, 2014 with a payment
    The amount that you owe
    Interest, calculated monthly
    Late penalties calculated from:
    April to October
    File nothing The amount that you owe
    Late filing penalty
    Late penalties calculated monthly from April 2014 until the day you file

    When an extension is filed, but no payment is sent, the taxpayer will be responsible for paying the tax liability due plus interest and late payment penalties calculated from April to October. While the late filing cost is a bit more, the approved late filing timing gives a person the time space needed to raise the money due.

    Payment Plans

    Regardless if you filed an extension, if the tax liability cannot be paid by April 15, taxpayers still have the option to contact the IRS to set up a payment plan. The IRS will consider and likely approve a payment plan for a late filing where a taxpayer can explain why full payment is not possible when due This approach is far better than a late filing avoidance as it provides the IRS full explanation and eventually a full payment over time. It also avoids tax auditors and agents who come looking for a person they think might be committing tax evasion, which is a federal crime.

    In Summary

    A tax liability that can't be paid by April 15 is not the end of the world. With an understanding of how the tax laws work, filing tax paperwork and paying tax liability in a timely manner is manageable.