taxes

Owe Taxes?

You should file your tax return on time. The IRS may charge a late filing penalty if you don't timely file your return or six-month extension. If you are not able to pay the tax you owe by your original filing due date, the balance is subject to interest and a monthly late payment penalty. If you file an extension for 2017 but do not pay all tax owed by the original filing deadline April 18, 2018, the IRS will charge a failure-to-pay penalty — 0.5% per month of your unpaid taxes and interest.

Remember, late filing and late payment are two different things. Filing for an extension only delays the date of your tax filing. It will not avoid penalties for any taxes owed. If you don’t owe the IRS anything or get a refund, there is no late filing penalty, even if you do not get an extension.

The IRS considers failure-to-file a more serious issue than failure-to-pay. The failure-to-file penalty is hefty — 5 percent of the taxes you owe for every month your return is late, up to a maximum of 25% of unpaid tax. Therefore, be sure to file a federal extension. Some states may require you to file a separate extension, so check your state’s tax law.

The IRS wants you to pay all tax due by the original tax filing deadline April 18, 2018, even if you are filing an extension for 2017. Therefore, you should estimate your tax due and pay that amount with your 2017 extension. If you overpay, you will get a refund.

What if you owe taxes when you file tax return?

1. Pay now

You can pay amount owed in full with your tax return filing by automatic payment from your checking account or by check, money order or debit/credit card.
Fees apply when paying by debit/credit card.

2. Request a short-term (120 days or less) payment plan

The IRS allows 120 days to taxpayers to pay their full tax balance.
Fee: There’s no fee to request the short-term payment plan. However, there is a penalty of 0.5% per month on the unpaid balance.
You can pay with automatic debit to your checking account, check, money order, or debit/credit card.
Fees apply when paying by debit/credit card.

3. Request an installment agreement to pay taxes

You can set up IRS payment plans called installment agreements. You can apply for an installment agreement online, over the phone, or via IRS forms.
You can pay through automatic direct debit to your checking account.
Apply online: $31 setup fee
If you owe less than $10,000 to the IRS, your installment plan will generally be automatically approved (pay in 3 years).
If you owe more than $10,000 through $50,000, there is a six-year installment agreement.
If you owe between $50,000 and $100,000, you may be able to work out a a seven-year installment agreement. See Form 9465, the Installment Agreement Request, for details.

A tax practitioner can help you prepare your federal and state tax returns, including filing tax extensions.

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