Many business owners find themselves overwhelmed with running their business. They often watch their tax-filing deadline come and go without taking action. Missing a tax deadline is not necessarily the end of the world. If it happens to you, don’t worry – you’re not alone.
You do, however, need to take some sort of action soon to avoid problems with the IRS down the road. This is not something that you can simply ignore and hope it goes away. It is also something that can get worse the longer you wait.
File For An Extension
You are eligible for a tax deadline extension, but you must file for it with the IRS. An extension gives you more time to get the necessary completion and submission of paperwork and forms. However, it is important to realize that, if you owe the IRS money, it is still due by the original tax deadline. Even if you file for a tax deadline extension, you will still need to send in an estimate of the taxes you owe. You will incur penalties and fees if you pay your taxes late.
Penalties For Paying Late
If you fail to pay the IRS on time or not at all, you will more than likely face stiff penalties, fines and additional filing fees. When you don’t pay on time, interest will be assessed at .5% of the amount owed for each month that the tax remains unpaid from the due date. There is a 25% maximum penalty that can be assessed.
Those who are self-employed and do not pay their taxes will not receive credits towards Social Security retirement or disability benefits. When you don’t file your taxes, you are essentially not reporting any income to the Social Security Administration.
If you don’t file your taxes, the IRS will eventually file a substitute return for you. The problem with this is that there are limits the IRS has as to what information they are able to obtain to file your return. They may not have access to information regarding exemptions and expenses that you be entitled to and could end up overstating your actual tax liability.
Once the IRS files this substitute return for you and assesses tax, they can begin the collection process. This might include placing a levy on wages or bank accounts or filing a federal tax lien against your business or personal property.
Have More File Business Taxes Late Questions?
Contact an accountant. The best thing to do if you are in a position where you cannot file your taxes on time is to contact an accountant. Accountants are familiar with tax laws and can offer solutions to help you avoid penalties and liens. For more information, contact Hacker Accounting at 602-375-5251.