Tax Day was back in mid-April, but some people missed it. In many instances, individuals avoided filing their tax return because they owed.
That was not a good idea back then. It’s become a worse idea as time has passed.
When the calendar page flipped to April 16, the Internal Revenue Service began assessing non-filing and non-payment penalties, plus interest. And those added costs just keep piling up.
You best move is to at least file a Form 1040. Submitting your return electronically is the fasted way option. Once Uncle Sam gets your filing, the non-payment portion of the charges will stop.
Free File still open: If your adjusted gross income (AGI) last year was $84,000 or less, regardless of your filing status, check out Free File. It’s open through the Oct. 15 filing extension deadline.
You can choose from this year’s eight tax software companies. Or, if your AGI is too much for Free File, you can use the fillable forms option, again at no cost.
With the tax paperwork out of the way, it’s time to figure out how to pay what you owe.
The IRS has some suggestions.
Pay online: If you now have the money to cover your federal tax bill, go electronic here, too.
The IRS accepts several e-payment methods. You can use —
- IRS Online Account,
- IRS Direct Pay,
- Electronic Federal Tax Payment System (EFTPS), and
- Debit or credit card or digital wallet payments.
When you pay electronically, you’ll get immediate confirmation. Direct Pay and the EFTPS payments also allow taxpayers to receive email confirmations.
Apply for a payment plan: If, however, you’re still having money troubles when it comes to your tax bill, consider paying it over time. That will at least start reducing penalties and interest charges.
You also can go directly to the IRS, conveniently through IRS.gov, to apply for one of its payment plans, including installment agreements.
The IRS offers two payment plan choices.
A short-term payment plan is available if the total tax balance you owe is less than $100,000 in combined tax, penalties, and interest. Here you can get additional time — up to 180 days — to pay the balance in full.
If that payment plan turnaround is too quick, check out the IRS’ long-term payment plan. This option is available if your total bill is less than $50,000. Again, as with the short-term plan, that debt amount includes penalties and interest due in addition to your unpaid tax.
With a long-term plan, you pay in monthly payments for up to 72 months. Payments may be set up using direct debit (automatic bank withdraw), which eliminates the need to send in a payment each month. That not only saves postage costs, it reduces the chance of default.
Although interest and late-payment penalties will continue to accrue on any tax amounts that weren’t paid by April 15, when you set up an installment payment plan the IRS cuts your failure to pay penalty in half while the agreement is in effect.
IRS.gov has a couple of special pages — Apply online for a payment plan and Additional information on payment plans — with details on its plan requirements, costs, and benefits.
You also might find these items of interest:
- Tax Day is done. Now what? Plenty!
- Ways to electronically pay your tax bill
- IRS payment plans available if you owe but can't pay in full
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