One sign that you’ve reached “adulthood” is that you get more excited on the day you receive your tax refund than you do about all other holidays combined.
But for people who either can’t complete their tax returns, or (worse yet) discover that they owe state or federal taxes, this time of year can be full of anxiety, stress, and spent scrambling for solutions
Here’s what to do when you can’t file (or pay) your taxes by April 15th, and how to hopefully avoid this problem in the future.
Can’t file yet?
Sometimes it’s due to information you still need, or a personal situation that will keep you from being able to file your tax returns by April 15th.
If you’re getting a refund, you may be able to avoid a huge penalty for filing late. And as long as you file within three years of this April 15th (or this October 15th if you get an extension), you’ll still eventually get your refund.
Otherwise, it becomes a donation to the government, and you will have the eternal gratitude of your fellow citizens. But if you owe money now, the IRS penalty for not filing your tax returns can be much greater than the penalty for not paying your tax bill on time.
If you owe taxes and don’t file your return or extension by April 15th, the amount is usually 5% of the additional taxes owed for every month that your return is late, up to a maximum of 25% of the amount owed.
The good news is that it’s relatively easy to get an extension for actually filing your taxes until October 15th of this year to file your taxes. Go to IRS.gov and search for Form 4868 (your local library may have copies of this form on hand).
But don’t wait until April 15th to file the extension—especially if you need help in doing so from the IRS and/or a tax preparer (they tend to be a bit busy this time of year).
Can’t pay your taxes?
If you owe money and can’t pay it right now, you still have some relatively painless options, as long as you still file tax returns by April 15th.
First, select the option of “I will mail a check” when asked how you are going to pay your taxes (if you choose electronic payment options, the entire amount owed can be debited from your account, potentially creating a whole ‘nother batch of problems).
Then send a check (hopefully by this April 15th) for whatever you can afford to pay. Contact the IRS at 800.829.1040 to arrange payment terms and amounts for the remaining balance.
Be aware that even if you file and pay what you can now, the amount owed can be hit with a half-percent penalty for each month that the balance remains unpaid, again up to 25% of the balance.
So it will be worth your time and energy to raise the amount due however you possibly can.
Don’t forget about your state income tax return, either. But luckily for late payers in this area, Wisconsin is one several states that have an installment plan for those who can’t pay all that they owe on time.
Call the Wisconsin Department of Revenue at 608.266.7879, or go to revenue.wi.gov for more information.
No problem next year
One way to avoid this stress in the future is to have your employer withhold a greater amount from your paycheck in the future.
Check with your employer’s human resources or payroll department to find out how to increase your withholding amount. If you’re retired, you may want to bump up the withheld amount on your Social Security, pension, or retirement account distribution check.
Unfortunately, you will then have to get by on a little less each month. But a year from now instead of worrying about coming up with the money to pay the taxes you owe, you will be eagerly anticipating your refund.