Haven’t filed your taxes yet? It’s ok, you’re not alone. Hard to believe, but it is true; not everyone files their taxes in early February when tax season begins. In fact, last-minute filers—those of us who wait until the last two weeks before the April deadline to file—make up about one-third of all taxpayers in the USA!
Waiting too long, however, can be problematic. Rushing to beat the deadline can lead to mistakes.
So, with that date in mind, the time is now to get organized and either complete the forms yourself or seek out professional preparation help. Either way, do not ignore filing your taxes. Sad to say, your tax obligation will only get bigger and definitely will not magically disappear. And filing late will only lead to paying perhaps hundreds of dollars in interest charges.
Start by Getting Your Tax Paperwork Organized
Paperwork is not everyone’s strong suit. We realize that even tax documents can be tucked in places around the house with junk mail, coupons, and household bills. And then there’s the information that may be locked away in your computer or some website you have not visited in months. However, as unpleasant as it may be, organizing your tax documents is a necessary part of filing your taxes. It is also the first task in the filing process. So, get organized right now. We promise you’ll feel better when it’s done.
The following are documents you will probably need for completing your taxes:
- W-2 forms
- 1099 forms
- Mortgage interest statements
- Receipts for tax credits or deductions like charitable giving, childcare and education costs,
- Receipts for medical bills
- Interest statements
- Health Savings Account (HSA) statements
Here’s a tip:
Create a folder in a place you will remember, and start collecting next year’s tax information as you receive them. This includes your donation receipts, register receipts for medicines, doctor bills, etc. That way, you will be almost completely prepared when tax time arrives next year. And here’s the best part of collecting as you go: once you’re organized, you can even file early.
Should You Just Take the Standard Deduction or Itemize?
The clock is ticking. So, just to be done with your taxes, you take the standard deduction, because who has time to itemize? Since the advent of the Tax Cuts and Jobs Act, the standard deduction was effectively doubled, so it may not make sense for everyone to itemize their deductions.
But it is possible that your expenses add up to more than the standard deduction, which would make itemizing your best bet. Why? Because every deduction you claim reduces the amount of income you’re taxed on, lowering your tax bill. And while it might not make sense to itemize your federal taxes, itemizing your state taxes could save you a nice chunk of change.
Want help itemizing your deductions? Ask us for advice. But keep in mind that the longer you wait, the harder it may be to get someone to help.
What happens if you fail to file your taxes on time?
If the April 18th filing deadline passes by and you still have not filed, there will definitely be repercussions from your decision, however, the severity depends on if you owe the government or not.
If you know you’re getting a refund
You won’t be penalized for failing to file. However, the IRS won’t give you any money until you file. You have three years from the original deadline to file and still receive your refund. But don’t play games. If you don’t file by then, you will forfeit your refund.
If you owe taxes, expect to pay a penalty
In fact, you will be charged a “failure-to-file” penalty of 5% of the taxes owed for each month—or part of a month—that your return is late, up to a maximum of 25%. You will also be charged interest on any unpaid taxes.
Late-Payment Penalties
It is important to note that if you file on time but don’t pay your bill in full, you’ll be charged a late-payment penalty (0.5% up to a max of 25%) and interest on your unpaid taxes starting the date payment is due, even if you file a tax extension. However, filing is still the cheaper option.
The Sooner You File The Less You'll Have to Pay
If you can’t pay your tax bill and didn’t file an extension, we suggest that you contact us ASAP to file as soon as possible. Why? Because filing without paying will likely cost you up to 10 times more than the late-payment penalty. Remember, the sooner you file, the less you’ll have to pay.
Another Option: Get an Extension
If you start now, you should have time to file your taxes. But if you’re missing documentation—or something is prohibiting you from making the filing deadline—you can request a six-month extension. Simply fill out IRS Form 4868 and submit it to the IRS by April 18.
An Extension Doesn't Mean You Have More Time to Pay Your Tax Bill!
Remember, however, that a filing extension doesn’t buy you more time to pay your tax bill. It simply gives you more time to file. When you request an extension, you must estimate your tax liability (if any) and send payment with your request. If you don’t, you’ll be charged penalties and interest on the amount you owe after April 18, 2022.
Pay What You Can
Can’t cover it all by the deadline? Pay as much as you can when you file for an extension and try to knock out the balance before the IRS contacts you, which is typically from 30 to 60 days. If you can’t pay it off by then, you can apply for a payment plan. And good news—you can set up the plan on the IRS website without having to call and wait on hold for hours.
Get Your Taxes Done Right
If filing yourself is too overwhelming, contact the Insogna CPA team immediately for a consultation. We will collect your information and get your filing or extension moving promptly.
Whatever you do, don’t wait until it’s too late!
