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What happens if I file my taxes late?
Table of content
- What happens if I file my taxes late?
- Why do people file their taxes late?
- How much money will I owe for filing taxes late?
- How is the Failure to File penalty calculated?
- Can I reduce or remove a penalty from my taxes?
- How to apply for an Extension of Time to File?
- How to apply for a Payment Plan?
- How do I file my late taxes?
- Can you still file taxes after the deadline?
- How many years late can you file taxes?
- What happens if I miss the tax deadline?
- Can I file two years of taxes at once?
- How do I file taxes from prior years?
Let’s start from the top.
How do I file taxes from prior years?
It comes around every year like clockwork and, although we know when to expect that dreaded bill, many of us still file our taxes late. It’s doubtful that any of us actually plan to file our taxes late, but sometimes it is out of our control. So what happens when we file our taxes past the return due date?
This article will aim to answer all of the questions you might have about late tax filing while providing you with some valuable advice so you can better prepare for next year’s taxes.
Why do people file their taxes late?
According to a survey done by IPX1031, tax procrastination is a huge reason why many Americans file their taxes late or at the last minute each year. As many as 33% is the estimated number of late filers. What were their reasons for procrastination? First, about 40% of those filing late reported that they found their taxes too time-consuming, 22% found it too stressful, 22% want to make sure it’s correct, 10% feel no rush because they won’t be getting a refund, and 6% are worried they’ll owe money.
It’s interesting to point out here too that, although many were afraid to file or found it too time-consuming, the average federal refund amount in 2020 was $2,707. That’s almost 3 grand that the government has likely overtaxed you throughout the year and they get free reign to spend that money interest-free until you do your taxes. The longer you wait, the longer they can utilize your money. If that’s not reason enough to file your taxes early, the fine you’ll likely get stuck with might be.
How much money will I owe for filing taxes late?
The best option to ensure you’re not late with your taxes next year is to work with a financial advisor ahead of time. This way, when that May cut-off day comes around, you’ve already filed and, hopefully, are enjoying a much-needed refund. Do you need help ensuring that you don’t get caught with an unexpected tax bill next year? Our experts are leaders in tax planning and time management. Reach out for a conversation with Ideal Tax today.
We provide professional guidance to people whose lives have been affected by tax problems. To evaluate your specific tax issue and determine if you qualify for tax relief, please contact us for a free consultation. We are COVID-19 prepared, we will work with you over the phone and via e-mail.
The content of this post does not replace the advice of a licensed tax professional. Consult a qualified tax professional for questions specific to your circumstances.
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Tax Relief, FAQ
Tax Relief is about setting up a payment schedule or negotiating a settlement with the IRS. This is not about getting rid of your tax obligations. It’s more about helping you to pay off your tax debt.
- Are they qualified to offer tax relief services? While the IRS requires that a representative be licensed as an attorney, CPA, IRS Enrolled Agent or attorney, that doesn’t make them eligible to provide such services. Tax relief is a highly specialized area in tax law. It is crucial to ensure that the professional or firm you choose has the experience and knowledge necessary to provide the best results.
- Are the tax professionals licensed to own the company? There have been many tax relief companies that have emerged to capitalize on the growing demand for their services. However, they may not adhere to the legal and ethical compliance requirements of professional licensure. There can be a temptation for firms not to adhere to the rules of licensed ownership. This could lead to a tendency to prioritize sales goals over ethical business practices.
- What’s their reputation? This is a difficult question because companies who promote themselves online will put information that they want you to see, and exclude the information they don’t. It is important to use objective and independent sources. To see what customers have to say about their experiences with a company, check out the Better Business Bureau and Ripoff Report. Avoid sites such as “Best of”, where companies pay to be included in a positive manner.
Experience and performance are more important than any type of license to provide the best representation. A Tax Attorney can represent taxpayers in Federal Tax Court. However, very few cases involving back tax end up there. Most cases can be resolved by the IRS administrative process. It is therefore important to hire a representative who is both familiar with the Internal Revenue Manual, IRS Tax Code and is skilled in applying the rules. It is important to be able to talk to the potential representative and not just a salesperson to make the best decision.
Tax relief services can cost anywhere from a few hundred to thousands of dollars. It all depends on the type and number of services you need. The cost of tax relief services can also vary depending on the person you choose to represent you and how they bill you.
The IRS is the only entity that can make the final decision. However, qualified tax relief professionals can help you determine if your situation qualifies for the program. Our CPAs, EAs have been able to determine whether clients are eligible for the program with an accuracy of more than 90%. OICs that are successful average savings of 95% on the balance owed.
Reputable tax relief companies will conduct a thorough assessment of your situation with licensed tax relief professionals. They will assess your situation and determine the best programs for you. If done correctly, you will get a clear idea of what is possible.