You had good intentions, but you just couldn't pull it together in time. Here are some suggestions for dealing with delinquent taxes.
One of the problems with waiting until the last minute to prepare and file income taxes is that you don't know what might pop up in your personal or professional life to delay you.
If this happened to you this year, or if for whatever reason you simply didn't have all of the information you needed by the deadline, you're probably wondering what to do now.
Here are some options.
Take care of your tax obligation as soon as possible. If you're due a refund, it doesn't matter if you miss the deadline (though you may lose the money owed you if you don't file within three years). If you must pay in, file quickly to minimize any penalties the IRS might assess.
Complete an Installment Agreement Request. This is done on an IRS Form 9465, or you can enter the information online here. You're only eligible if you owe $25,000 or less (total of tax, penalties, and interest) for businesses or $50,000 for individuals. All required forms and schedules must be completed. You may want to do this when, for example, you can only pay a portion of the tax owed.
Contact the IRS right away if your return is late because of hardship. If you lost your job, got divorced, or faced some other unfortunate life event that prevented you from filing, or if you can make a case for a different reasonable cause, the IRS may waive penalties and postpone collection activity. Keep in mind that you may be asked to increase your payments if your economic situation gets significantly better.
Request an Offer in Compromise. Talk to us before you reach out to the IRS about this. The agency will sometimes negotiate with you and settle for less than you owe based on your current and future incomes.
Go over your return again, or ask us to review it. It is possible that you missed a credit that you were eligible for, miscalculated, didn't take a deserved deduction, etc. If that's the case, you may either be entitled to a refund or at least owe less than you think, which will minimize penalties and interest.
If you are at all concerned that the IRS may take unwanted action against you, contact us immediately. We've worked with the IRS for different clients, and we can advise you on what steps you'll need to take. While we're doing that, why not get a jump on preparing for your 2014 taxes? Income tax planning should be a year-round endeavor.