So you missed the income tax deadline? Take a moment to take a deep breath. Please know that you have options!
Not all is lost. Sometimes the situation is out of your control.
For example, the main reason I procrastinate on filing self-employed taxes isn’t for a lack of trying, but because I almost always find errors with client-issued 1099-MISC.
When you’re an online business owner or blogger it takes a lot more time to get all the tax details in order.
And sometimes this can mean missing the income tax deadline.
Still, it’s a good idea to do the very best you can to make the filing deadline. If you just can’t there are certain steps to take to ensure you don’t get hit with late fees and past due notices.
Here’s what to do if you miss the income tax deadline and need to file an extension.
1. Get corrected tax statements
After checking the 1099-MISC I received from clients versus my income statements and deposits, I noticed a $250 discrepancy.
One of the forms showed that I received $50 more than I actually billed, and the second one showed that I received $200 more than I actually deposited.
This means I will be taxed on $250 of income that I never received. #notcool There’s no way I’m going to let that slide!
If you have incorrect statements, or are simply waiting for documents that haven’t been sent out yet, you need to jump on this right away.
Write up and email or jump on the phone, to put some extra pressure on the accounting department to send over the documents you need.
People are busy (especially during this time of year) so you may have to remind them several times before they will give you what you need.
Aim to get your tax documents as soon as possible because each day you haven’t filed your taxes by the tax return deadline means more fees that will be assessed to your account.
2. File online right away
File online ASAP! Don’t wait to submit it via snail mail as that could delay the processing and cause you to get slammed with late fees.
There are multiple IRS approved filers that allow you to efile your tax return for free. And the best part is that it will usually be processed within 24 hours.
But don’t freak out if you’re unable to obtain all of your tax statements before the deadline. Sometimes it’s just not possible to get everything in time, no matter what you do.
Need suggestions for the best online tax prep services? Here are some of the top recommendations.
I know this is scary but take a deep breath and know that you have options. Simply file your tax return as-is and prepare to do an amended return once you have the corrected tax statements.
This will likely cost extra money (if you pay a tax professional) as well as additional time to prep and fill out the forms.
An amended return can’t be filed electronically like a regular tax return, so you will have to send it via snail mail (with return receipt requested).
This also means that if you expect to get money back that it will take several weeks, or even months, to get the amended return processed. So yeah, tough luck if you’re hoping to access those funds soon.
Click here to learn how to file self-employed taxes for $100 or less.
3. Submit an extension
You can avoid filing an amended return by choosing to file an extension instead. You’ll be able to give yourself more time, which will help relieve some of the pressure.
Doing so will give you until October 15th of this year to get your taxes filed correctly.
This is likely the option I’ll be choosing if I’m unable to track down the corrected tax forms in time. Beware though, that if you owe any tax you’ll still have to pay the estimated balance by April 15th.
So it’s not like you’re able to avoid the tax return deadline scott-free.
I suggest booking an appointment with a CPA or tax professional now so you can at least put in all the information you currently have and work on an estimated balance due.
Or if you feel confident enough, print Form 4868 directly from the IRS website to request an automatic tax extension.
4. Pay what taxes you can
Finding that you owe a large amount of taxes downright sucks, but it’s important to pay as much of the balance as possible.
This will keep the extra fees and penalty charges to a minimum, then you can apply for an installment agreement for the remaining balance. If approved, this process will completely eliminate you from having to pay excess fees and interest charges.
If for some reason you do miss the tax filing deadline, expect to pay one or all of these additional fees.
- Failure to File Penalty – There is one loophole for this though, if you can prove to the IRS there was a valid reason for paying late, they are open to hearing it. The failure-to-file penalty (FTF) fee is of 5% per month, up to a 25% max, for each month you don’t file your tax return.
- Non-payment Tax Penalty – If you do an estimate and find that you owe a balance, your account will be charged a failure-to-pay (FTP) penalty charge 0.5% on the amount of unpaid taxes, each month they are outstanding. If you filed your tax return on time but didn’t pay the entire balance owed, this fee will decrease slightly. Do what you can to not compound your fees.
- Underpayment Fee – As I mentioned, you want to pay as much of your tax balance as possible, to avoid an underpayment fee. This penalty varies depending on what category your situation falls into. If the IRS classifies this as a one-time thing, the fees may be very small, but if this is a recurring problem the fees could be quite high.
For more information on avoiding additional tax fees and other penalties, check out the IRS website.
In some cases it’s often a better option to take out a small personal loan or pay your tax balance with a credit card, than to owe the IRS money.
You could save a lot of time, money, and headache versus the high interest rates and fees that the IRS charges.
And NO ONE wants to be in debt to the IRS. Trust me on that!
Now, let’s switch things up and continue with the tips so you can actually enjoy tax season this year!
In order to avoid missing the tax deadline next year, here are a few simple changes you can make. By simply applying tips, you too might actually look forward to getting your taxes done!
5. Set up a system for next year
Whether you love it or hate it, the tax return deadline comes around year after year. (What am I talking about? We all hate tax season!)
Some years you’ll have an easy time getting everything together, and other years you’ll have to deal with a lot of errors and organizational nightmares.
To avoid these ups-and-downs it’s best to set up a good tax system for next year. In other words, stop procrastinating to the last minute! Ha. I’m mostly yelling this at myself right now.
If you don’t have time to do the bookkeeping yourself, hire someone to help manage it. A bookkeeper will likely only cost $100 or so each month and will be well worth the investment — especially if you can avoid owing the IRS thousands of dollars next year.
In addition, you’ll be less stressed knowing that you have a good plan in place, which will save you time and give you peace of mind. Those benefits are priceless.
If you want to tackle the finances yourself, sign up for small business bookkeeping software, or use a spreadsheet, to track your monthly transactions.
It will be a lot easier to simply print out a report of your income and expenses if you set aside a few minutes every month to do a little bit of bookkeeping.
Do yourself and your business a favor by creating a simple system! Whether that’s through the use of a digital tool, bookkeeping software, or a notebook.
Finding a financial system will help make sense of your transactions in a quick and easy manner.
6. Maximize your refund with mobile apps
One of my all-time favorite ways to maximize my time and money is to simplify your financial life. Many of the programs out there will do the work for you!
And as humans we are prone to forgetfulness, mistakes and procrastination, but with the help of apps, tools and other financial programs, it’s easy to maximize your refund without much effort.
There are apps available to help you track your income so you don’t overpay on taxes.
You can snap photos of your receipts so you don’t miss a single deduction. Plus, there are tools to help you calculate how much your tax refund will be — down to the dollar.
Some of my favorite mobile tax apps include:
- FreshBooks Cloud Accounting app
- H&R Block Tax Prep app
- QuickBooks Self-Employed app
- TurboTax app
- TaxAct mobile app
And don’t forget, if you don’t think you’re getting the maximum refund or you have a feeling your taxes could have been done better, it’s definitely okay (and encouraged) to find a second opinion.
After all, it’s your hard-earned money, you want to make the most of it.
7. Find a pro who specializes in what you need
When I first started working as a tax professional, I noticed I really liked helping small business owners and entrepreneurs file their taxes.
I’m very passionate about empowering small business owners (even if it’s a business of one) grow – without debt – while taking the headache out of tax time.
I remember one tax return specifically, for a super talented hair stylist. She made good money, but between the cost of rent for her space and paying for her kid’s daycare, she was left with hardly any profit.
After a few minutes asking her questions and understanding her frustrations, we worked out a plan for her to negotiate a better deal with the salon owner — one that helped her work less, and increase the revenue she brings into the shop.
This left her more time to be with her kids, and saved her money on daycare expenses — all while giving the salon owner a good deal of revenue too. It was a win-win!
That’s when I knew I had a knack for helping professionals, small business owners and freelancers!
Find a professional who specializes in your area of expertise by checking out the Internal Revenue Service directory to find a professional with the best credentials. They can offer valuable and custom advice that’s perfect for your situation.
This is why I strongly recommend finding a tax professional, career advocate or support group that focuses on what you need help with.
When you find a pro that is an expert in your niche, you just can’t lose!
8. Get your refund faster with direct deposit
Nothing is more exciting than finding out you’re getting a tax refund! On the flip side, nothing is more frustrating than realizing your refund got lost in the mail or somehow got misplaced.
If you want to get your refund faster, so you can pay for your business and personal expenses, the best way to do that is to request direct deposit into your bank account or with a Visa Prepaid card from the IRS website.
This method is ideal for loading your tax refund, because it deposits your refund into your account or your card instantly, which is much faster than waiting for a check in the mail.
Many prepaid cards come with a zero liability policy so your tax refund is safe, even if your card is lost or stolen.
This gives you instant access to your funds, so you can pay your bills, continue to grow your business or even buy something nice for yourself!
That’s definitely not something that can be said about a check sent via snail mail!
9. Do the best you can, then get a second opinion
You may not believe me when I say this but the individuals who work at the IRS are people too.
SHOCKING, I know!
But seriously, if you make a mistake you can plead your case to them. I’ve seen many occasions where fees and penalties were waived because the taxpayer explained the situation.
Once you feel like you’ve done the best you can to organize and file your taxes, consider having a second review. Getting a second opinion from an expert or friend can’t hurt.
Most of the time, they’ll be able to help you find more tax deductions or point out important credits you may have missed.
Beating the tax deadline doesn’t have to be stressful. With TaxACT, everything you need to confidently prepare and e-file your taxes is right at your fingertips.
You got this! File your simple or complex federal return free today with TaxACT Free Edition.
Then once tax time rolls around, you might actually look forward to it!