How To Avoid Or Minimize The Penalties Associated With Missing The Tax Filing Deadline
No one likes paying penalties.
However, the IRS likes levying them to encourage tax compliance.
Without there being penalties, many Americans could not even bother paying taxes.
There has to be a huge cost for breaking the law so that people stay compliant.
The IRS charges serious penalties to those who default tax payments or miss tax return submission deadline.
If you do not submit your tax return on time, you will pay a 5% penalty on your unpaid tax, for every month that you delay submitting your tax return.
This can translate to a huge sum if you delay for a long time and you have a big tax debt.
IRS levies the heftiest penalties to those who completely do not submit their returns and fail to pay unpaid taxes.
In that scenario, the penalty is 50% of the unpaid tax.
You can be levied more than one penalty and that will make you to pay a lot of money to the tax authority.
Paying tax in itself is not desirable to many people.
Therefore, paying IRS penalties is detestable making it necessary to find ways to avoid or minimize the penalties.
Plan To Prepare Your Tax Return Ahead Of Time
Most cases of missing the deadline are because of lacking the time to prepare returns or completely forgetting to prepare them.
You should plan to prepare your tax return.
You need to have your plan on paper documenting the exact dates that you will deal with tax return preparation.
Alternatively, you can plan to hire someone who will do this work for you.
You should outsource tax return preparation to a certified accountant.
Many computer programs will help you to prepare tax return easily.
Ask For an Extension
At times, you will not be able to beat the deadline.
In such a scenario, you need to request an extension from the IRS.
You have to submit your request ahead of time using a special form available on the IRS website.
Along with submitting your extension request, you need to indicate your rough tax estimate.
IRS will give you an extension that will exempt you from late filling penalties up to October.
However, this extension will not fully exempt you from tax default penalties.
The IRS will require you to pay at least 90% of your tax debt by the April deadline.
Pay As Soon As Possible After Missing the Deadline
Missing the deadline should not stress you.
It should drive you to complete your tax return within the shortest time possible and fully pay your tax debt.
Paying as soon as possible and submitting your tax return the soonest will save you from many penalties.
IRS allows individuals to minimize their tax burden through tax avoidance strategies.
You can also avoid some penalties or minimize them.
The easiest way to avoid late filling penalties is to file your tax return on time.
If that is not possible, you should request an extension.
If everything else fails and you miss the deadline, you should act fast to complete your tax return and pay your taxes.