Everything You Need To Know About Past Due Tax Return Problems
According to the IRS website, it is recommended that persons file all of their taxes that are due. However, they’ve also suggested that this should be done even if you are unable to pay your taxes in full. So, read on as we dive into everything you need to know about past due tax return problems.
As previously said, it is in your best interest that you file even if you’re unable to pay the total owed. Hence, taxes should be filed at the same location and in the same manner as if you were filing on time. if for some reason you did receive a notice, it’s advised that the past due is sent to the address on the notice.
Why Should The Past Due Return Be Filed Now?
Reduce Penalties And Interest You should ensure that you file now to avoid penalties and interest. When you file now, you’ll be able to pay with the least amount of applied charges. Additionally, all late payments are also factored into the total that you’ll pay when you file now.
Claim Your Refund When you don’t file on time or you simply neglect your filing duties after the due date, you’ll run the risk of losing your refund. So, if you’re entitled to a refund for estimated taxes or withholding, you’ll need to file within a maximum of 3 years after the due date. Only when this is done will you be able to claim your refund. It should be noted that this rule also applies to claiming Earned Income Credit or additional tax credits.
The IRS has stated that it holds all tax refunds when at least one or more returns are past the due date. So, if ever their records on you indicate that you’re past due, you should expect that they might hold your funds. In essence, they hold the funds until they receive the due return or a suitable reason as to why you were unable to file.
Protect Social Security Benefits When it comes to dealing with past due tax return problems, you’re bound to have a couple of issues if you’re self-employed. Self-employed persons can run into a series of problems if they fail to file their income taxes. This just simply means that any income earned from your business will not be reported to the Social Security Administration.
In essence, you’ll lose the opportunity to receive credits. These credits all add up in the long run and contribute to different things. The main ones being visibility benefits or even Social Security retirement benefits.
Avoid Potential Issues Obtaining Loans When you fail to file for your return, the loans department can easily delay your approvals. Hence, copies of filed returns should be submitted to your lenders, brokers, or financial institution as soon as your file. So, if you’re thinking of purchasing a new home, applying for a loan to start a new business, or furthering your education, you’ll need to ensure that you file to prevent delays in your funding.
Owing More Than You Can Afford To Pay If you’re faced with the case of owing more than you can pay, the IRS has advised that you request some additional time. This can be done by simply calling 800-829-1040 where you’ll contact the Online Payment Agreement department. So, if you’re in need of some extra time, call now and have your date extended from anywhere between 60 to 120 days. You can even request a simple installment plan that can qualify you for a special compromised offer made by the department.
Past Due Tax Return Problems That Occur If You Fail To File Voluntarily
Substitute Return If for some reason you’re unable to file your return, the IRS has indicated that it can easily file a substituted form. When this is done, there is a chance that you won’t receive credit for exemptions or deductions. However, a special Deficiency Notice is filed and proposes a tax assessment.
Since the deficiency letter offers you 90 days, you’ll need to file within that period. This allows you to either file your tax returns or file for a petition within the Tax Court. In the instance where neither of the mentioned options is done, the IRS will proceed to carry out their proposed assessment.
If for some reason the details on the form are incorrect, you’ll be able to do the following:
You can also contact the payer of the income; doing so allows you to request the corrected form
When you send the completed tax return forms, it is advised that the corrected forms be attached
If the IRS manages to file the forms before you do, it’s best to continue with the process of filing your tax returns. This gives you the opportunity to reap the benefits of credits, exemptions, and deductions. After the IRS has been notified of this, they will adjust the numbers on your account to indicate potential changes.
Collection And Enforcement Actions Whenever the IRS files a return for you, the prepared form is a representation of their proposed assessment. This then leads to a series of tax bills. If for some reason you fail to pay, the collection will be done.
The collection process usually involves introducing a levy on your bank account, your wages, or even the filing of a tax lien. While humans usually make mistakes, if you fail to file on a repeated basis, you will be subjected to harsh enforcement measures. Some of these include criminal prosecution or even added penalties.
Need Help Filing Your Return? If you’re running into problems contact the following number:
Persons experiencing problems with preparing their returns are expected to complete the 4506-T Form, check the box on line 8, and request a transcript of their tax return. If you are employed, it is advised by the IRS that you contact the payer of income or your employer.
Takeaway As we conclude, we have just looked at Past Due Tax Return Problems. When you fail to file your tax returns before the due date, you can run into a series of problems. Some of these include losing your social security benefits and even being delayed from accessing loans. So, if ever you’re experiencing problems completing your forms, you should seek assistance from the Tax Counseling services for the elderly or the Volunteer Income Tax Assistance program.
Why Taxes? Why Now?
"We opened up shop here in the Wylie, Sachse, Murphy area in 2018 with a passion to help start-ups and small businesses get on top of their bookkeeping,” Allen explains.
“What we found was a lot of folks just don’t get the tax game. And now that there are new laws and regulations, many are starting to panic; but trust me, small businesses have everything to gain with the new Section 179 Deductions.
“After filing a few late returns, in that first year, we learned that there is a real need for some tax expertise. We spent a good part of 2018 getting up to speed on tax law, and now I am an Enrolled Agent, federally licensed to practice before the IRS on behalf of my clients and anyone else who may be facing the daunting ‘IRS boogie man.’
“During tax season, we are prepared to handle it all.
For individuals we have helped folks with past-due tax returns and work with the IRS to eliminate all penalties... sometimes we given get rid of the tax debt itself.
For companies the biggest problem businesses of all sizes have is filing and paying their payroll taxes - both state and federal - on time. The rules for 940s and 941s are extremely confusing so we have helped a lot of companies catch up.
If they like our work, they sometimes retain us for bookkeeping and payroll.
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