The most stressful time for most business owners and self-employed people is the time to file their taxes. Unlike a traditional job where the employer does the math for you and keeps you ahead of your tax filing deadlines, you’re on your own as a self-employed individual.
One minute you’re busy with sponsorships or sending out deliveries, and the next you find out you’ve missed the tax deadline. If that sounds like you, it’s about time I catch you up on what to do now if you haven’t filed taxes!
Not only do you get all the information you need to pay taxes, and file tax returns, but also on what to do if you’re way past your deadlines!
When is the last day to file taxes 2023?
Most taxpayers in the US have to pay taxes on their income by Tuesday, April 18th,2023. This date is the official tax day to report your income and file for taxes for 2023. However, tax day is customarily set on April 15th by the IRS. Furthermore, if you filed for an extension, you’re required to file by October 15th to get your return filed!
What Happens If I Don’t File My Taxes Before The Deadline?
You pay late-filing penalties
If you haven’t filed taxes before or on tax day brings about late filing penalties. These penalties are imposed in order to encourage people to file their income tax returns within deadlines and guarantee the efficient operation of the tax system.
The failure to file penalty is typically 5% of the amount of taxes you owe, and can go up to a maximum of 25% of unpaid taxes for each month of the tax year the return is late.
If your tax return is late by more than 60 days, the minimum penalty is the lesser of $435 or the remaining balance of the owed taxes. But if you’re worried about missing the tax return deadline, there won’t be a penalty levied on you!
You owe additional interest on taxes
You thought you’ll get a slap on the wrist by paying a penalty? Wrong…
The IRS imposes an increasing interest on the taxes you owe along with the late filing penalty if you passed the deadline and you haven’t filed taxes. The interest amount isn’t fixed and is actually accumulating each day till you finally pay your taxes. That means you end up paying much more in taxes than you might on the penalty.
The current interest rate on underpayment of taxes is the Federal short-term rate plus a 3% additional rate.
You can’t file for your refunds
Do you work from home? Are you buying expensive equipment to record videos for sponsored posts? Or do you spend more than you want to, so you can keep up your influencer appearance?
All these things and more entitle you to tax deductions. You can even write off a portion of your rent in some cases! But when you fail to file your taxes, you can’t claim these tax deductions that are meant to lower your tax burden.
However, if you haven’t filed yet, it’s not too late – you can file your returns within three years!
So before push comes to shove, track down a professional tax advisor and bookkeeper. They’d be able to file your taxes, create accurate books, and get you those tax refunds!
You become ineligible for government benefits
Eligibility for government benefits is directly correlated with tax compliance. If you inaccurately declare your income or fail to file your taxes, you may be disqualified from receiving government benefits and other forms of necessary financial help for both individuals and families.
Here’s a list of benefits that you risk being deprived of:
- Child Tax Credit (CTC)
- Healthcare Subsidies
- Education Credits
- Social Security Benefits
- Unemployment Benefits
- Housing Assistance
You face audits
If you’re unable to file for your taxes or record your income honestly for years, the IRS will trigger an audit. These processes can’t only be demanding and time-consuming, but they also need you to produce acceptable evidence of your financial status.
It can drain your finances and lead you down a problematic rabbit hole with the IRS that isn’t easier to come out of unless you hire a professional legal tax advisor!
Can I go to jail for not filing taxes?
Yes, you can go to jail for not paying your taxes or filing your tax returns in some cases. Current tax law states the possibility of going to jail for 1 year for every unfiled tax return.
But for your case to come to that, the circumstances need to be extreme. And by extreme, I mean you’d have to be convicted for tax evasion or fraud! To avoid this possibility altogether, you’d need to file a tax return for all previously unfiled years.
What to do if you haven’t filed taxes on time?
If the deadline’s way past you now, it’s time to take immediate action.
The IRS advises that you file your taxes as soon as possible and offers many relieves to make taxation an easier process. Here are 3 things you can do to smooth over this crinkle!
File for Penalty Relief
If you’ve been a regular filer and paid your taxes for the last 3 years, you qualify for penalty relief under the First Time Penalty Abatement. This relief is a request to the IRS to remove late-filing penalties from your account because you can prove reasonable cause for why you were late to file this year.
Given your reputation and proven credibility, you act in good faith, leading to the IRS to remove the penalty. So how do you file for this?
- Call the IRS number on the letter you received.
- Mention you received a letter from the IRS to the spokesperson.
- Describe the penalty you want to dispute.
- Explain why you’d like to have that penalty removed.
File for an extension
Next, you still need time to file your taxes. Getting an extension to file a return can be the biggest lifesaver at times. You don’t get additional interest charged, however, you might still have to pay your penalties for the tax owed.
Pay The Taxes You Owe Online
You can either file your taxes online or on paper. But the best way to fast-track your filing after missing the deadline is to go for electronic filing.
If you make $73,000 or less in income per year, you may file online and get access to the IRS free file tool that does the calculations for you.
Destress Financially With Stanton Financial Co.
If you want to dive head over heels into being the creative mastermind of your brand, Stanton Financial Co. can help you.
Stanton Financial Co. is a premium bookkeeping and CFO service that brings big business strategies to small businesses, solopreneurs, influencers, and content creators.
Unlike most bookkeeping services, we make it easy for you to profitably manage your fluctuating income. Collaborate with brands and focus on doing what you do best– we’ll take care of everything else!
