All the tax returns should be file by the taxpayers which are due. A taxpayer may qualify for the payment plan depending upon the situation. The most important thing to know is that full payment of taxes can save your money.
Things to do when your return is late
You need to gather return information and need to bring all information related to income and deductions for the tax years for which a return is required to be filed. There are different ways of doing payment on your taxes. Payments can be made by credit card, electronic funds transfer, check, cashier’s check, or cash. There are also payment options for those who cannot pay full payment at a time. By paying as much as possible now, the penalties and amount of interest will be lessened. Based on situation, a taxpayer could qualify for an extension of time to pay, a temporary delay, an instalment agreement or an offer of compromise.
There are generally two types of extensions. One is short-term payment extension and other is monthly payment plan.
A taxpayer gets 60 to 120 days to pay in short term extension. No fee is charged, but the late-payment penalty plus interest will apply. Generally taxpayers will pay less in penalties and interest if the debt were repaid through an instalment agreement over a greater period of time. Penalties and interest will continue to be charged on the unpaid portion of the debt throughout the duration of the instalment agreement/payment plan. When you are going to pay tax bill, it is necessary to check penalties and interest imposed. It is possible that your interest and penalties amount is more than the interest rate on a loan or credit card. You should pay as much as possible before entering into an instalment agreement. You can also pay your tax via credit card or debit card. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee or flat fee. There is user fee you need to pay if the instalment agreement is approved.
It is necessary to understand consequences of not filing a past due return and the steps that the IRS will take. Taxpayers who continue to not file a tax return and failed to respond to IRS requests for a return may be considered for a variety of enforcement actions.
If you haven’t filed a tax return yet, please contact a tax consultant for assistance.