The first deadline was April 16 and was extended to the final deadline, which was October 15. However, this extension was done to file taxes, not for payments, as taxpayers were assumed to have made payments.
Unfortunately, some people still missed it. Here is what you can do if you miss the tax deadline again.
There's Still Room to File
If you missed the deadline and filed for an extension, you can still file your tax. We advise you to do it as soon as you can. Even if your income is under the IRS filing requirement of 28,000 for married joint and 12,400 for single for 2020, you can still file.
But if you did not file for an extension and you are owing, you will be penalized. Penalties are calculated on the amount owed. Defaulters will be put under the following penalty:
● Failure to Pay: The failure to pay the penalty cost is 5% of your monthly tax bill, and it increases every month it's unpaid after the deadline till it gets to 25% of the amount owed.
● Failure to File: The failure to file penalty is 0.5 per cent.
If the failure to file and pay the penalty occurs in the same month, the maximum amount you will pay for both is 5%, which is the failure to file penalty.
Having a remaining unpaid bill can damage your credit score or further lead to criminal prosecution. So it is better to file as soon as you can.
Use Refund as Excuse
If the IRS owes you a tax refund, then there are zero penalties for filing late. According to the Head of Tax, Eric Bronnenkant, there is no need to hurry when you have a refund. You don't even have any late payment penalty and zero interest.
But it is still advisable to file your tax to prevent the IRS from keeping your funds. Failure to do so or waiting for more than three years before filing can lead the IRS to keep the refund due to the limitation statute.
Get a Repayment Plan
The IRS may grant you a repayment plan to clear your tax. When you can complete payment of the whole bill, you can go for the entire payment agreement that allows you to make monthly payments to cut out debt.
People with higher bills may be eligible to get an instalment agreement that gives them more than 120 days to pay off their debt. The plan also comes with benefits such as warding off any accrued, additional interest and penalties.
Individuals may also be eligible to get an Offer in Compromise from the IRS that allows them to pay less than the amount owed when you meet some criteria. However, the IRS has indicated that the Offer in Compromise is not for everyone. Before applying for it, one must have explored all their payment options.
Take Out Penalties
When you experience some hardship and show the IRS while it’s the reason for your delay in filing, you may be exempted from paying penalties. They can also further allow you to delay debt payment.
If you have exceeded the deadline of paying your tax, the best option is to start the process of clearing it rather than trying to avoid the problem.
Better still, you can talk to us at ATG Advisors to help proffer a solution.