How to Stay Out of Tax Trouble if You’re a Late Filer
If you can’t get your 2011 taxes filed to the IRS by the April 17 deadline, don’t sweat it. Money Girl has 5 options to keep you out of the woods.
Laura Adams, MBA
For 2012, taxes are due on April 17. If you won’t meet the deadline, here’s what you need to know to stay out of trouble:
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You can file an extension. A tax extension gives you an additional 6 months to file your return. Simply visit irs.gov, follow the Free File link, and electronically submit Form 4868 opens PDF file on or before April 17. Voila—your new tax deadline will be October 15!
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Estimate your tax liability. Filing an extension doesn’t give you more time to pay taxes, so estimate what you owe and pay as much as you can on time—otherwise you’ll also have to pay stiff penalties and interest. You can e-pay taxes at the last minute with a credit or debit card or by having funds transferred from your bank account.
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File even if you can’t pay. If you owe taxes but can’t pay them on time, submit your tax return anyway. You can set up a monthly payment agreement with the IRS for up to 6 years—as long as you owe $50,000 or less.
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You may qualify for a payment extension. If you’re unemployed or self-employed with at least 25% less business income due to the economy, you may qualify for a 6-month extension of time to pay tax if you submit Form 1127-Aopens PDF file by April 17. If you qualify and can pay tax by the extended deadline of October 15, you’ll avoid the late-payment penalty.
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You may qualify to settle your tax debt. If you owe a large tax bill that you can’t pay through a payment agreement, you can make the IRS an offer to settle for less. Use Form 656 opens PDF file to submit what’s known as an offer-in-compromise.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.