We understand that filing your tax return is probably one of the most stressful parts of your year.
The complicated math and long process of filing forms leads many people to hire an accountant to do their tax returns and get them in on time for them every year.
If this is something that is not in your budget, or you started filling out your tax return too late this year – you may find yourself missing the deadline. Or you may have not realized that you needed to hand in a tax return at all.
Even if you have missed the deadline, it is crucial that you hand in your tax return every year.
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Do I Have To File My Tax Return?
In the US, everyone who is sent a tax return by the IRS must file it.
You must file your tax return whether you think it is relevant to you or not. You must not lie on your tax return or try to hide income in order to reduce your tax bill.
Generally, you are expected to pay your tax bill when you file your tax return. But, it is possible to apply for payment extensions if you cannot do this.
You are expected to file your tax return by April 15-18th depending on the year.
Can I File My Tax Return Late?
People often wonder if they still have to file their taxes if they miss the deadline. The answer to this question is yes, you should file your tax return every year that you are sent one.
Where possible, you should try to file your taxes on time, because you will be fined for missing the deadline. Unless you have previously agreed on an extension with the IRS.
However, filing your tax return late is better than not filing it at all.
If you do not file your tax return you can risk further fines, being audited and possible jail time.
Should I Still File My Tax Return If I Don’t Have Enough Money To Pay It?
If you cannot pay your taxes on time, then your best option is to file your tax return early and put in an application for a payment extension.
These extensions can be for between 60 and 120 days. They may reduce the number of fines you have to pay.
It is best to file your taxes on time if you cannot pay the bill in full because filing late will mean that you will have to pay a late fee on both the filing and the payment.
You also cannot get a payment extension if you have not filed your taxes.
Will I Get Fined For Filing My Taxes Late?
There are three types of fines you will be faced with if you file your taxes late:
- Late filing fees
- Late payment fees
- Interest
Late Filing Fees
You will be fined 5% of your tax bill for every month late that you are when you file your taxes. This caps out at 25% however.
This will be added to your bill once you have filed.
Late Payment Fees
You will be fined 0.5% of your tax bill for every month that your tax bill remains unpaid. You will continue to be fined this way until you have paid in full – there is no limit on the number of months you can be fined for.
Interest
Filing your taxes one week late will delay its processing by around 6 weeks. The IRS can make you pay interest on late filings. You may also be charged interest on late payments as well.
These interest rates are recalculated every three months and your payments will change if needed. The interest rate on late filings and taxes is currently at 3%.
So, currently, you would pay an extra 3% of your original tax bill for every quarter that your tax bill went unpaid.
Can I File My Own Taxes?
Yes, you can file your own taxes but the process is very complicated.
To make filing your own taxes easier, you should be adding up everything as you go throughout the year. You can use your own spreadsheet system or get an online bookkeeping system to help you do this.
Many people choose to hire an accountant to help them put together their tax returns.
If you do not have a lot of spare time or knowledge about our tax system then you can save yourself a lot of time by bringing someone else in to do your taxes for you.
You can also be more sure that your taxes have been filed correctly when you have an accountant do it for you.
Benefits Of Filing Your Tax Return Even If It’s Late
Here are three reasons why filing your tax return late is better than not filing it at all.
You Can Claim A Refund
If you delay filing your tax return for too long, you will lose your chance to claim your tax refund for the year.
You Can Continue To Claim Social Security Benefits
A self-employed person who has not handed in their tax returns will not be able to claim the full amount of social security benefits they are eligible for.
You Can Prevent Credit Score Damage
If you are caught failing to file your tax return, you will struggle to get any kind of loan approved until you have settled your debts with the IRS.
Summary
Even if it is late, it is important to hand in your tax return every year.
Handing in your tax return late is not good, but it is a lot better than not handing it in at all. So, it is worth filing when you can, the sooner the better.
Handing in your tax return late will lead you to be fined for handing it in late, for making your payments late, and you will be charged interest on both of these fines.
However, the alternative is possible jail time and much larger fines for failure to file and pay the correct taxes.
