You must file something! Here's how
You've put off filing for 105 days, but any more procrastination could cost you. So don't just sit there.
Actually, do sit there just a bit longer.
Stick with Bankrate.com, and we'll walk you through what you have to do today to get the Internal Revenue Service what it wants.
Don't ignore the
The key to surviving last-minute tax filing is realizing that the
IRS will not be ignored.
These guys aren't kidding around when
they set deadlines. The IRS wants your paperwork, and it wants it
now. If you don't file your return today and you owe taxes, you may owe an additional penalty for failure to file unless you can show reasonable cause. The assessment is 5 percent per month (or any part of a month, even just a day) of
your balance due.
||Not filing your return will cost you an additional 5 percent each month of any due tax.
||Not paying what you owe will add an extra charge of 0.5 percent each month of your due tax amount to your overall IRS debt.
||If you haven't filed or paid, the combined penalty rate is 22.5 percent.
||If you don't file or pay for five months, the 0.5 percent failure-to-pay penalty will accrue, up to 25 percent of what you owe, until the tax is paid.
||In that case, the total penalty for failure to file and pay could amount to a 47.5 percent of your tax bill.
||Interest also is charged on the overdue amount.
Even if you file on time but don't
pay what you owe, the IRS can charge you. This
nonpayment penalty is one-half of 1 percent
of the tax due each month, or any part of a
month, that isn't paid. The fine continues until
it reaches 25 percent of your late payment.
If both penalties apply in any month,
you get a small break on the failure-to-file penalty. The IRS will
reduce it by what it's charging you for not paying, making your potential maximum
nonfiling penalty "only" 22.5 percent.
But when you combine the late-filing and nonpayment
penalties, even with the IRS "discount"
on the late-filing charge, your total tax penalties
could be substantial if you continue to ignore
your tax responsibilities. Put off filing and
paying for five months, and the 0.5 percent failure-to-pay
penalty continues to run, up to 25 percent,
until the tax is paid. This means your total
penalty for failure to file and pay could amount
to a whopping 47.5 percent (22.5 percent for
late filing, 25 percent for late payment) of
the tax owed.
The IRS also charges interest, currently 6 percent, on the amount
of tax due. The rates are adjusted quarterly.
And if your return is more than 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100 percent of the tax required to be shown on the return.
Interest charges also will continue to
add up -- on the penalties, too. So let's get started and get your
Another shot at
Since you've waited this long, you might be inclined to put off
the inevitable a bit longer. Guess what? You can -- sort of.
The IRS will wait for your return until
Oct. 15 if you file for an automatic extension.
You can do this by sending in Form
4868, Application for Automatic Extension of Time to File. You can e-file the extension request from your home computer or have your tax professional who is an IRS authorized e-filer do so for you. Regardless of which method you choose, the extension request also must be made by April 15, or postmarked with that date if you snail mail it.
The extension will give you six more months to get your tax act together. But you don't have to wait until that ultimate deadline. Any time you get your tax filing material in order before then, you can send in your 1040.
Filing this form won't delay any money you owe Uncle Sam. While
he'll wait patiently for your paperwork if you ask, he wants the
money on its way today or all those interest and late-payment fees
will be tacked on to your final bill.
How do you know how much to send? You
don't have to be precise. As long as the amount comes to 90 percent
of what you eventually owe when you crunch all the numbers, you'll
be OK with the IRS.
The easiest way to estimate the amount
to pay is to look over last year's tax return. If your financial
and tax situation are basically the same as last year -- you have
the same job, still married, two kids, deductible mortgage interest
-- then what you owe this year is likely to be close to the amount
you owed last year.
Choosing your form
By now, you may have decided that it's just as easy to file and
be done with it. In that case, your first step is to pick which
form to use. The IRS gives you three options: the 1040EZ, the
1040A and the long 1040.
|-- Updated: April 15, 2009