- Missed the Deadline to File Taxes – Here’s Why You Should Still Pay Them
Missed the Deadline to File Taxes – Here’s Why You Should Still Pay Them
The annual deadline for filing taxes is May 17, which means that it has long passed by now. However, that doesn’t mean that the opportunity to file taxes is gone for the rest of the year. Taxpayers who haven’t filed their taxes and didn’t request an extension should file right away to avoid penalties and keep the interest as low as possible. However, even if your clients don’t owe tax, it’s still crucial to file their returns sooner rather than later. Many people feel intimidated by the prospect of filing taxes, especially if they aren’t prepared by the time the deadline has passed. Luckily, with the help of software for tax preparers, you can convince your clients to get their documents together so you can file their taxes as soon as possible. Here is why your clients must file their taxes even after missing the deadline:
They Won’t Get a Refund
While many people aren’t enthusiastic about paying taxes, one notable perk of filing tax returns is that they are eligible for tax refunds. Additionally, taxpayers won’t have to pay the penalty for late filing if they’re owed a refund. However, they won’t receive it unless they file, so it’s best to file as soon as possible, even if it is after the deadline. However, when you have clients that owe tax, they’ll also have to consider a host of other factors. Ideally, they should file a tax return or ask for an extension. They should also pay all taxes they owe before the deadline to avoid penalties and interest. However, in reality, that sometimes isn’t what happens; additionally, the request for an extension is also due by the tax deadline, after which penalties and interest take effect. The more time passes, the more expensive these will be.
The Sooner, The Better
The IRS usually charges 5 percent of the tax amount owed each month that the taxpayer files the return late. However, this calculation applies only for filing up to five months after the deadline. After that, they will subtract the penalty for failing to pay from the overall penalty, accounting for other penalties, like failure to file. If you take more than 60 days to file your client’s taxes and pay them, however, their situation rapidly worsens. The minimum penalty they’ll pay is either $435 or 100 percent of the unpaid tax, whichever is lower. Additionally, the penalties add up very quickly, so your clients must know the importance of filing their taxes and paying right away, even if they can’t afford to pay the whole bill at once. The government enforces a penalty rate for failure to pay, which is 0.5 percent of the unpaid tax owed each month or part of the month. The penalty stops when the taxpayer fully pays what they owe or until they pay 25 percent of that is due.
They Have More Time Than They Think
It’s important to note that even though the deadline has passed, the IRS says that some taxpayers still have time to file returns even if they didn’t request an extension. For instance, members who served in the military or are currently in a combat zone can qualify for an extension of at least 180 days to file and pay. Disaster victims who qualify also have more time to file and pay their returns. Lastly, support personnel in combat zones or in a contingency operation as part of the Armed Forces can request a filing and payment extension. Regardless, if your client has difficulty paying their taxes by the deadline, it’s crucial to coordinate with them to determine their options. Doing so will help them avoid the hefty penalties they will otherwise face. The IRS recognizes the various circumstances that can complicate a person’s ability to file, offering excellent solutions to your client.
The importance of filing tax returns and paying them on time cannot be understated, but various people miss the deadline for different reasons. By encouraging your clients to take advantage of the various options available to them, they won’t have to worry about facing expensive penalties that can compromise their financial situation. Keystone Tax Solutions offers the best professional tax software
for tax preparers that’s easy to use, affordable, and designed to grow your tax business. It’s entirely on the cloud, has unlimited customer support, and has no hidden fees. Try a free demo today!