Still haven’t filed your taxes? How to avoid penalties or lost refunds
Breaking News,Advice, Resources & Guides
Jon Healey April 12, 2024
After the epic storms deluged California in early 2023, the IRS and the state Franchise Tax Board gave most taxpayers in the state until mid-November to file their returns and pay what they owed.
After the epic storms deluged California in early 2024, the IRS and the
Franchise Tax Board
gave taxpayers in San Diego County until mid-June to file their returns and pay what they owe. For everyone else in the state, Monday remains the filing deadline at least at the moment.
If you don’t pay at least a goodly chunk of your 2023 taxes by then, you will be penalized automatically, even if you file for an extension by Monday night.
Tax experts say the best course of action is to file your return on time and pay everything you think you owe. The IRS, nonprofit groups and commercial tax-preparation companies offer multiple ways to prepare and file returns for free online.
If you can’t afford your tax bill, you have some choices to make by Monday at 11:59 p.m., when the deadline is due to arrive.
There is a chance President Biden will approve Gov. Gavin Newsom’s request for a major disaster declaration covering Los Angeles, Ventura, Butte, Glenn, Monterey, San Luis Obispo, Santa Barbara, Santa Cruz and Sutter counties by the end of the day Monday, which could trigger a delay in the tax-filing deadlines. Counting on a last-minute reprieve, however, is a gamble with potentially high stakes, depending on how much you owe in taxes for 2023.
The IRS wants to give California taxpayers $94 million in refunds if they file returnsWhat are the penalties for not filing?
Tax experts say that if the IRS owes you a refund, you won’t face a penalty for not filing your return. Instead, you’ll have a different deadline: If you wait more than three years to file a return for that year, you’ll sacrifice your claim to the money.
If you have taxes due, Andy Phillips, director of H&R Blocks Tax Institute, said it’s important to file your return or file for an extension on time, even if you can’t cover the balance at the moment. That’s because the penalty for not filing is at least as bad as the penalty for not paying.
The IRS will charge you 5% of what you owe every month until you file, with the penalty capped at 25%, Phillips said. But it also charges interest, and there’s no cap on how much interest you’ll owe. Currently, the interest rate is 8%, compounded daily.
The Franchise Tax Board’s penalty is 5% per month, capped at 25%; the state’s tax code makes no mention of interest charges. It also imposes a lower penalty on people who owe no more than $540.
Both the feds and the state offer hardship exceptions.
IRS gives taxpayers in disaster-stricken San Diego County two extra months to file returns
Need more time to gather your paperwork? Both the IRS and the
Franchise Tax Board
offer six-month extensions on the deadline for filing an annual return to anyone who applies.
There is a catch, though: Even with an extension, you’ll still face an underpayment penalty if you don’t pay at least 90% of what you owe by the end of the day Monday, Phillips said. But at least you won’t be hit with the added penalty for not filing.
What are the penalties for not paying?
Just like the penalty for not filing a return, the IRS charges 5% per month the balance goes unpaid, capped at 25%, plus interest. The Franchise Tax Board imposes the same penalty, with interest currently at 8%.
Phillips said the IRS applies a penalty only if you paid less than 90% of what you owed by the deadline. If you are facing a penalty, he said, you need to consider how that amount (including interest) stacks up against the cost of taking out a loan, using your credit cards or pulling cash out of savings or profitable investments.
One option is to enter a payment plan with the IRS, which will cut the underpayment penalty in half, Phillips said although you’ll still be paying interest on the amount you owe while you’re chipping away at your balance. As long as you’re compliant with the plan, he said, the IRS won’t go into forced-collection mode.
New IRS Direct File program now available in California
You can apply for a payment plan with the IRS through the agency’s website.
The Franchise Tax Board also offers installment plans that allow you to pay your tax debt over time, typically three to five years. The plans are available only to taxpayers who owe less than $25,000 and who’ve filed all required returns in the previous five years. Applications are accepted online, by mail or by calling (
800) 689-4776
.
How does the IRS collects penalties?
Regardless of whether you file a return, the IRS and the Franchise Tax Board will have collected data from employers, banks, mutual funds and other sources about your income and tax payments. And they will use that information to calculate what they believe you owe (or what they owe you). They won’t refund your overpayment automatically you’ll get that only if you file a return but they can force you to pay the taxes you’ve underpaid.
Phillips said the IRS typically starts by sending a letter asking you to pay up. If you don’t, it can seize a portion of your wages, your Social Security benefits and your investments. As a last resort, he said, it can put a lien on your house and force its sale.
To avoid going into collection, Phillips said, you might offer to pay a compromise amount for example, if you can show that you weren’t responsible for the underpayment. The feds accept only a small percentage of the applications for this kind of relief, he said; it’s more likely that the agency will put you into a payment plan or temporarily suspend collection efforts until your income grows. If you find yourself in the latter category, you will face ever-growing interest charges on your unpaid tax debt.
Consumer advocates warn taxpayers to be cautious about hiring anyone who promises to be able to slash your tax debt, because many of those pitches are from scammers. Phillips agreed, saying, “Make sure you do your homework about who youre dealing with.”
Low-income workers can get huge tax refunds. This event helps them get the money Who has to file a return? The feds require anyone who earns more than a certain amount set by the IRS to file a return, even if they don’t owe anything.
varies according to filing status and age; for example, for 2023 it was $13,850 for a single filer under 65, or $15,700 for a single filer 65 or older. The requirement applies regardless of your citizenship status. But if you dont have a Social Security number for example, if youre in the United States on a temporary work visa or you’re here without authorization youll need to obtain an
Individual Taxpayer Identification Number
. Mandy Irvine, associate director of economic mobility for United Ways of California, said its a misconception that an ITIN is a sign that youre in the country without authorization ITINs are used by anyone who doesn’t qualify for a Social Security number. In addition, the law bars the IRS from sharing the information it collects from tax returns with Immigration and Customs Enforcement. Through
, the United Way connects people with IRS-certified volunteers to help them prepare and file their returns. If you need an ITIN, Irvine said, look for a volunteer site that has a certified acceptance agent who can check your passport or other documents to verify your identity. That way, she said, you wont have to mail them to the IRS.Where can I get last-minute help from the IRS?
The following Federal Taxpayer Assistance Centers will be open Saturday from 9 a.m. to 4 p.m.:
300 N. Los Angeles St., Los Angeles, CA 90012 501 W. Ocean Blvd., Long Beach, CA 90802 880 Front St., Suite 1247, San Diego, CA 92101 212 Coffee Road Suite Ste.200, Bakersfield, CA 93309 2525 Capitol St., Fresno, CA 93721 1301 Clay St., Oakland, CA 94612 450 Golden Gate Ave., San Francisco, CA 94102 55 S. Market St., Suite Ste.100, San Jose, CA 95113 4330 Watt Ave., Sacramento, CA 95821
The agency stressed that although IRS employees will be on hand to offer in-person help with questions and account issues, they will not prepare your taxes for you. It also suggested that you come equipped with two forms of identification (including a current government-issued photo ID), the Social Security or Taxpayer Identification numbers for everyone in your household, and any notices or mailings the IRS has sent you.
If you have a question about a tax return you’ve already filed, make sure to bring a copy with you.
