So far in 2018, more than 141 million tax returns have been filed according to the Internal Revenue Service (IRS). Not everybody has done so, however. The number of people filing their taxes late, or filing tax extensions to push back the filing date, has risen dramatically in the last decade.
In 2009, 10.25 million people filed for extension and 5.5 million businesses. By 2017, that number had jumped to 13 million. This year, a record number of people asked for extension, nearing 20 million! Even President Donald Trump filed for an extension this time around.
The IRS will grant an automatic extension of up to 6 months for anyone that asks for one prior to the normal filing deadline. You don't even need to explain why.
Filing an extension does not, however, delay paying. If you owe money, you're required to pay it by the normal filing date. If you wait, or get the amount wrong, you'll be charged interest-and possibly penalties-for delaying. These can add up very quickly. The IRS currently charges four percent interest that is compounded daily. The late-payment penalty is typically 0.5% per month.
Filing for an extension is always a better bet than failing to do so, or filing late. The IRS says the late filing penalty can be 10 times as costly as the penalty for not paying.
Don't take a chance. Always hire a tax attorney that deals with the IRS on a regular basis.
Extensions Will Delay Your Refund
There may be legitimate reasons for getting an extension, including waiting on paperwork or complicated tax situations. If you are one of the 83% of Americans that file taxes that will get a refund, filing for an extension will only delay getting your tax dollars back.
What If You Can't Pay?
You're still on the hook for the payments and penalties. It doesn't get any better with age.
You may be eligible for an installment program. The IRS may be willing to work with you to set up a fixed monthly payment. If you and the agency both agree that it would not be possible for you to pay the taxes owed and also pay for your living expenses, they have the option of designating your account as "Not Currently Collectible." While they will not collect payments during this time, penalties and interest still accrue.
In any of these cases, you need to work with a professional tax attorney that deals with the IRS regularly. They know the rules and where the IRS may have some flexibility. Since they work with them regularly, they are more likely to get the best possible outcome.
We understand the stress that encompasses dealing with tax filing. Complex tax situations will benefit greatly from tax legal expertise. Our team of Attorneys, CPAs, and Enrolled Agents are here to answer all your tax questions. Call Travis W. Watkins Tax Resolution and Accounting Firm now at 800-721-7054 for your Free consultation.