If you suspect you can’t pay your taxes this season, filing a return or requesting an extension is crucial. Just a heads up, the IRS is actually willing to help you out. But for them to lend a hand, they need to understand your situation first. So, the first thing you should do is file your return. And don’t worry—just because you owe money doesn’t mean you should skip filing. It’s really important to get that done!
Failing to file or request an extension immediately results in accruing interest and penalties. These costs can be minimized by promptly informing the IRS about your financial situation. It’s preferable to submit a return without full payment rather than not filing at all. Even if you don’t pay all taxes by the April 15 deadline, interest will accumulate despite an extension until October. However, this interest is more manageable than the penalties for not paying any taxes.
What Happens if I Don’t Pay My Taxes?
Beyond interest and penalties, the IRS can garnish wages, place liens on property, or hold your passport. Filing for an extension or submitting your return with financial details can prevent these outcomes. Even without full payment by April 15, submitting some amount when you file helps.
Are There Free Tools to Help Me Manage Filing for an Extension or Making a Payment Plan?
Yes. Volunteer Income Tax Assistance (VITA) sites nationwide provide free support to file returns or arrange extensions. They can also help set up installment plans up to 72 months for paying owed taxes. The IRS Direct File program is another free resource.
Are There Other Possible Outcomes?
If you endure unusual hardship, the IRS may designate your account as “currently-not-collectible.” This status involves sharing your income and expenses with the IRS, which assesses if you qualify. If you’ve lost your job due to illness and are facing hefty medical bills, the IRS might consider your situation as uncollectable after they hear from you. I know it can be tough to talk about financial struggles, but the good news is that the IRS is willing to work with you if you’re open about what you’re going through.
I Didn’t File My Taxes Last Year. What Now?
A lot of people steer clear of filing because they’re worried about owing money, but that worry might not be justified. Ignoring the issue won’t make it go away. It’s important to share your situation with the IRS—they’re there to help you out!
The IRS has seen just about every kind of taxpayer issue out there. You’re not alone in this!
Decoding the Details: Navigating Tax Responsibilities
- Filing tax returns or extensions is crucial, even if unable to pay in full.
- Interest and penalties commence immediately without filing or extensions.
- IRS resources and programs can aid in managing tax payments and avoiding severe consequences.
- Extensions and payment plans offer manageable solutions for tax debts.
- Volunteer assistance is available nationwide to aid with tax filings and payment plans.
- Communication with the IRS can prevent extreme measures like wage garnishment.
- Admitting financial hardship can lead to beneficial IRS arrangements.
- Tax breaks and refunds require filing; unfiled returns lead to missed opportunities.
- Long-term non-filing complicates financial situations but is resolvable with IRS cooperation.
- Understanding tax obligations is crucial for financial health and avoiding future issues.
