This year has been incredibly uncertain in many personal and financial aspects, and many people missed the tax filing deadline and payments. The most important thing to do is to have your tax return(s) prepared and filed as soon as possible. This is because not only is it unlawful not to file your tax returns, but the sooner you file the return(s), the more likely you can limit interest charges and late payment penalties.
Did you know that unfiled tax returns are a common reason people come to us?
It is true. One of the most common inquiries to our tax law firm is regarding unfiled tax returns. The average inquiry to our tax law firm involves five (5) years of unfiled tax returns. The most common reason that people don’t file returns is they fear they owe. And when they start receiving notices from the IRS or FTB, they contact us. Oftentimes, when we get the returns prepared, it drastically reduces the amounts that the government has billed them.
Why tax deadlines get missed?
Besides the anomaly events of 2020 and the fear of owing taxes, there are many reasons why people miss their tax deadlines and tax payments. For instance, a common cause for missing a tax filing deadline is that somebody left: a spouse, business partner, the bookkeeper, resulting in records and systems being unavailable, so instead of seeking help, the returns go unfiled. This often creates a snowball effect where once the one year is unfiled, the following year goes unfiled, and so on.
What are IRS penalties if I pay my taxes late?
If you fail to pay all your taxes by the tax deadlines, the IRS and State are authorized to impose interest and penalties on your underpayment. The IRS charges interest at its prevailing rate, which it publishes quarterly. The late payment penalty is generally .5% for each month there is an unpaid balance, up to a maximum 25% penalty.
When you file a late return with a balance due, this penalty amounts to 5% per month, for a maximum of five months. For example, if you owe $5,000 in taxes and failed to file a return or an extension by April 15, the failure-to-file penalty could build up to as much as 25% or $1,250.
What to do about your unfiled tax returns
If you have missed your tax filing deadlines in 2020 or have unfiled tax returns, contact us. You have an attorney-client privilege consultation. We have a lot of experience with this and you likely have a number of strategies that you can employ to get back on track and not have the added stress and fear of the unknown.
Our attorneys and accountants spend each year, every year, cleaning up back tax and accounting messes and lowering our client’s tax burden through realistic and practical tax planning for individuals.
Moskowitz LLP is a tax law and accounting firm that has dedicated over 30 years to representing individuals and businesses with civil and criminal tax problems, cleaning up accounting and tax messes, providing estate planning, and tax and accounting advisory services.
We make it easy and affordable for you to set yourself up for lower taxes and success.
Remember a blog post or email blast is not a substitution for obtaining personal legal and tax consultation. This information is not intended to be legal or tax advice nor does it form an attorney-client relationship between us.