As 2019 is nearing an end, you may have taken a look at your annual income taxes – and realized there’s a problem. What do you do if you are not able to pay your income taxes this year? The tax attorneys at Wiggam & Geer are sharing five pieces of advice that you should know if you owe the IRS.
1. Don’t Delay. File Your Income Taxes.
Taxpayers who owe the IRS this year may want to put off filing their taxes. But this is not a good idea. If you do not file by the tax deadline, or do not file at all, the IRS can impose some costly penalties. The current failure-to-file penalty is 5% of the tax owed per month, capped at 25%. So even if you cannot afford your taxes in full, you still want to file your paperwork by the deadline.
2. Consider Filing an Extension.
If you cannot file your annual income taxes by April 2020, you can request a six-month extension. To do this, the taxpayer must complete an IRS Form 4868 and submit it via mail or Easy Extension by April 15, 2020. You will also need to submit the IRS Form 4868 (and the IRS confirmation letter if you e-filed your federal extension) along with your Georgia tax return. It is important to note that an extension to file is not an extension to pay. So, taxpayers are still required to pay taxes owed by the April 2020 deadline, or else face interest and penalties.
3. Pay What You Can
If you cannot pay your income taxes in full by the deadline, but you can pay some – it is better to pay what you can, rather than nothing at all. Any penalties and interest will be based on the amount that you do not pay, so the smaller you can make that shortfall, the better it is for you in the long run. Currently, the failure-to-pay penalty rate is 0.5% of tax not paid by the due date, with a recurring monthly charge until the tax is fully paid or until 25% is reached.
4. Request an Installment Agreement
If you cannot afford to pay your income taxes by the tax deadline, the IRS does offer installment agreements. Taxpayers who have filed all required forms and owe less than $50,000 in combined income tax, penalties, and interest can apply for an installment agreement. This agreement allows you to pay your tax debt over a six-year time frame, with payment options including Direct Pay and payment via credit or debit card.
5. Consult an Atlanta Tax Attorney
If you are facing financial issues due to an illness in your family, divorce, loss of employment, or a down year for your business, you are not alone. Tax problems are more common than you think. About 26 million taxpayers currently are facing a federal or state tax issue. These taxpayers are not criminals. They are regular people with good intentions and their tax issue is due to something beyond their control. The IRS tax lawyers at Wiggam & Geer are dedicated to successfully resolving your tax issue and putting your mind at ease. Our practice focuses on representing individuals in matters before the Internal Revenue Service, the Georgia Department of Revenue, and other state tax departments.
To schedule a consultation with the Atlanta tax attorneys at Wiggam & Geer, call (404) 609-1300 or visit our website.