The IRS recently extended the tax deadline for 2021 to May 17. But what happens if you miss the new deadline? Whether you’re buried in a big project at your job or navigating a family crisis, the tax deadline can come and go in the blink of an eye. If you forgot to file your taxes before the deadline or didn’t request an extension, don’t panic! IRS agents won’t be showing up at your doorstep. However, it is essential to get in compliance as soon as possible. If you’re feeling too overwhelmed to navigate filing a late tax return, it can be helpful to work with a skilled tax attorney. Here are some steps to take if you forgot to file your taxes.
If the IRS Owes You a Refund
If the IRS owes you a tax refund, there won’t be any penalties for filing your return late. In fact, the IRS is happy to hold on to your money a bit longer interest-free. However, this doesn’t mean that you should take your time filing your taxes. You only have three years from a tax return date to claim your refund. After this period is up, unclaimed refunds are given to the U.S. Treasury.
While it may seem like it would be impossible to miss claiming your refund within the three-year period, millions of Americans do so every year. In fact, the IRS annually does a big media campaign—announcing the billions of dollars in unclaimed refunds for the year— to encourage delinquent filers to claim their money. In July 2020, the agency had a whopping $1.5 billion in refunds waiting for a total of 1.4 million delinquent taxpayers. All this is to say, it’s always best to not miss the deadline and procrastinate on filing your taxes. Many Americans are missing out on unclaimed refunds due to the simple dread of gathering their tax documents. If this is you, work with a tax attorney to ensure you get your refund.
If You Owe Money to the IRS
Conversely, you may owe money to the IRS. If you’re a taxpayer who is not expecting a refund, it’s even more crucial to file your tax return on time or if you miss the deadline, as soon as possible. Every day you miss the deadline is another day of delinquency for your return.The IRS charges interest and other penalties on your balance. In these scenarios, there are three types of penalties you may have to pay:
● Failure to file penalty. This penalty is 5% of your unpaid tax bill. It’s important to note that this penalty will be reduced by the amount of the “failure to pay penalty” for months where both penalties apply. This penalty may be applied for every month in which your bill goes unpaid for up to five months.
● Failure to pay penalty. This penalty is 0.5% of your unpaid tax bill. This penalty applies to every month (or part of a month) that your payment is late until your tax bill is paid or the penalty reaches 25% of the owed tax bill.
● Failure to pay properly estimated tax. This usually only applies to freelancers or contractors who did not make the correct estimated payments to the IRS throughout the year. This penalty is calculated separately for each required installment using Form 2210. In some cases, the IRS will waive this penalty for a first offense or if you meet certain criteria.
The best thing you can do if you miss the tax deadline and owe money to the IRS is to get on top of the situation as soon as possible. As outlined above, continuing to put off your taxes will leave you with a much higher bill than you would have had otherwise. Working with a skilled tax professional is the best way to alleviate the stress of the filing process and ensure you don’t incur mounds of interest on your tax bill.
Consult a Skilled Tax Resolution Attorney
No one likes filing their taxes. However, filing your taxes by the deadline or soon after, is the best way to prevent amassing a huge tax bill. If you are struggling to gather your tax documents or navigate the filing process, it can be helpful to work with a skilled tax attorney.
At Morgan Sebastian Law, Attorney Becky Sebastian is eager to help you navigate the complexities of your tax situation. We understand the challenges of paying taxes while experiencing financial hardship, and we are here to help you handle negotiations with the IRS. To schedule a consultation with an experienced tax resolution lawyer, call (877) 223-6605 or fill out our online contact form.