The clock is ticking for those who haven’t filed their 2018 tax returns yet. The federal tax filing deadline has long passed, and there are many who haven’t registered for an extension or even filed a tax return until now. If you are one of those, then this is your chance to save yourself from piling up tax penalties and steep interests on your default.
The tax penalty and interest that the IRS clamps on a tax defaulter are something you don’t want to face. Even if you are not able to pay in full or need an extension, because of one or the other financial jet lag you are facing, it’s best to file your return and sign up for one of IRS’s many payment options.
Let’s deep dive into the ways that you can still file your tax return and get a clear glimpse of the tax implications and criteria that determines whether your penalty can be waived or what are the penalties you might need to pay.
File your tax returns for free
You may use the Free File tool to prepare and file for your 2018 federal individual income tax return for free. There are two Free File Software options available; one for individuals with income below $66,000 and one for individuals with income above $66,000.
Save yourself from the increased penalties and pay as much tax as you can
Tax penalty and interest are imposed on those who haven’t filed their tax returns yet. Even if you are not able to pay the whole amount of the tax you owe to the IRS all at once, then pay as much as you can through the various online payment options available. This way, penalties will only be charged for the unpaid tax dues, which will reduce your tax liabilities.
You can pay your taxes in instalment
If the reason for the delay in filing your tax returns is a financial constraint, then the Online Payment Agreement can be your tax supporter. This feature can help you to set up a monthly payment plan which can divide your tax dues in instalments in a matter of minutes.
You may qualify for the Online Payment Agreement if your tax dues, including the income tax, penalties and interest are equal to or less than $55,000.
Filing the Tax Return could be the first step to seek a Tax Pause or Compromise Program
The IRS may put a pause on your tax dues if they are convinced that your financial condition will not allow you to clear out all your taxes in one go. But the first step to seek such a pause. until your financial condition stabilizes, is by filing the tax returns.
Another way to reduce your tax implications is by registering for the Compromise Program. The Compromise Program will waive some part of your tax liabilities, and you would not be required to pay the full amount and can get some tax relaxation.
You can check if you are eligible for the Compromise Program by using the online Offer in Compromise Pre-Qualifier Tool on the IRS website.
You may have extra time to file your returns
If you are a victim to a disaster, a military service member, an eligible support personnel in a combat zone or a U.S. citizen or resident alien who lives or works out of the U.S, then you may have an extended deadline to file for your returns. But remember, the clock is ticking, so you better file your returns soon to avoid unnecessary tax penalties and dues.
Find out the penalty charged on your delayed tax filing
The logic is quite simple. If you have filed your return 60 days after the April deadline then the minimum penalty will either be $210 or 100% of the unpaid tax amount, whichever is less.
So, if the unpaid tax is $210 or less, then the tax penalty will be equal to the due tax amount. If the unpaid tax is more than $210, then $210 will be the amount of your tax penalty.
You may be eligible for a tax penalty relief
If you are one of those whose tax withholdings or estimated tax payments fell short of the actual tax liabilities, then you may be eligible for a tax penalty relief. You would be happy to know that the IRS has reduced the threshold to qualify for this tax penalty relief to 80% of the total tax liabilities for the year. So, if you have paid 80% of your 2018 tax liabilities, then you can avail this relief and be saved from paying an extra penalty on your tax dues.
Also, taxpayers who filed their returns after the April deadline may contact the IRS to explain the reason for their delayed tax filing and may receive a relief on the penalty charged for such delay.
If you are one of those few who have always filed your returns on time previously and have a clear record with the IRS, then you may qualify for the first-time penalty abatement and receive a tax relief for the same.
What if one of your past tax returns is due?
This would be a piece of good news because individuals who are yet to receive a past tax refund are not charged any penalty for not filing their returns on time.
In conclusion, if you are yet to even file your tax returns for the fiscal year 2018, it’s never too late to do so. Use any one of the numerous options illustrated above to file your tax returns and see the option that can work best for you when it comes to reducing or waiving the penalty for late tax filing.
For more such tax news and updates, stay tuned with MyTaxFiler. We also provide a one-stop solution for all your tax-related woes. Simply drop a mail at email@example.com or call us at (888)-482–0279 for an on-call consultation.