I focus my practice on tax resolution, representing taxpayers in Colorado, Florida, Texas, New York, California and elsewhere. I frequently hear the question: "I need to file my taxes, but I owe the IRS and state and don't have the money to pay. What do I do?"
The answer to that question is: even if you do owe, file your tax return on time! The reason is this - many people don’t realize that the IRS charges a penalty of up to 25% just for filing your tax return late. That’s right - you will get hit with an additional 25% of what you owe if you miss the deadline for filing individual tax returns.
What most people don't know is that you can file ANY tax return on time and avoid the 25% penalty even if you don't send in the money that is owed on the return. Did you also know that, even if you can't pay the taxes, you may qualify for programs such as Offer In Compromise, Installment Agreements, and you may even be in a Non Collectible situation.
We see so many people who could have saved thousands of dollars on penalties if they just knew this one thing. So in the future, no matter what is going on in your life, file all tax returns on time even if you don’t send in the money owed with the return.
Yes, of course you’ll get an nasty letter from the IRS for not sending in the money owed but, you will have avoided a 25% penalty.
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