Every one of us has had an extension for something in our lives. Whether it is a school paper, something due at work, or our taxes, we all need a little more time on occasion. But what if you’re late with that extension? What if you were supposed to be filing your tax extension 3 months ago and you still haven’t? Then what?
This is a more common situation than you might initially think. Because filing a tax extension usually means getting rid of money–money that often you can ill-afford to spare–it’s common for people to put off filing if they can. But this is not the best way to get rid of your tax problem. This is:
- Take a good hard look at your finances. More often than not people who put off filing their tax extension, do so because they don’t have the money to spare for taxes. We highly recommend doing a tax form anyways and seeing how much you would actually owe. A lot of people are actually owed money and so putting off paying their taxes only hurts their own cash flow. Others owe money, but it’s a lot less than they think. Don’t spend time needlessly worrying–find out what it would be and then decide whether to file or not.
- Consider the penalties. Whenever you don’t pay your taxes, you get hit with late penalties. And whenever you don’t file your taxes, you get hit with a Failure to File penalty. And if you have both, well, you’re going to see a lot more money disappear than you should. Even if you don’t have the amount you’d need for filing your tax extension now, consider how easy these penalties make for you to get in debt. The longer you wait to file, the bigger they become.
- Set up a payment plan. If you don’t have the money for filing your tax extension now, consider a payment plan. The IRS is surprisingly open to them, as it gets them what they want–your money. And you should be open to one too, because it keeps your tax penalties much lower. If you don’t feel like dealing with the IRS, but are filing a late tax extension, consider using a past tax service. They can help you work out the payments, without you having to spend all your time dealing with the IRS.
If you’re late filing a tax extension, there are better ways to deal with it than just letting it sit there. Tax debt doesn’t go away that fast, but there are a lot of good solutions out there. Instead of racking up penalties and fees and interest, tackle the problem head on. You’ll be glad you did.Friday, December 3rd, 2010 at 10:09 am and is filed under Tax Tips.