What to do if you can’t file your taxes on time?
Non filing of tax returns attracts penalties by both federal and state authorities. If anybody failed to file return without a reasonable cause can lead to monthly penalty of five percent to twenty five percent of the tax due. The tax payers can claim deductions and exemptions while filing return whereas it not possible when Internal Revenue Service-IRS prepares tax returns for payers who did not file returns. It means the IRS version not allows any deductions and exemptions, when it prepares tax returns for the persons who did no file their returns within scheduled time.
Civil and criminal penalties can be attached with the taxpayer for willful avoidance of filing of return. Generally, the IRS may not impose criminal prosecution who did not file the returns when they responded and filed return for the notice issued by IRS. It is not difficult task to file past due return. Irrespective full or part amount can be made while submitting the past return. Different plans available to submit such returns, but payment of full taxes save the money from penalties.
The individuals who did not file their tax returns by the due date can get an automatic 6-month extension of time for filing of return. To avail such automatic extension of 6-month, the individuals must file Form 4868 which is an Application for Automatic Extension of Time to File U.S.Individual Income Tax Return. But the application should be filed before due date usually April 15 for the previous calendar year.
The IRS able to take steps against the persons who did not file the past due returns. Accordingly the IRS will file substitute return on behalf of the person based on the available information at IRS and from other sources. Consequently, the tax liability will be increased as the IRS will not consider any exemptions and deductions though the taxpayer legally entitled to. When the tax is assessed, the IRS will start the collection process through federal tax lien, wages, bank accounts etc. Even the IRS filed substituted return, still the tax payer can file return and can claim exemptions and deductions for which the IRS generally adjust tax return with correct figures.
Irrespective of any reason for not filing of a return, the person must file tax return as early as possible. Even there is short of funds for payment of tax, still options available for filing of return without payment of full amount. In case the person unable to pay the full amount with the return, still the person can make monthly installment payments after providing Installment Agreement.