Since the tax filing deadline comes at the busiest time of year for Realtors, many agents and brokers opt to file for an automatic extension to file with the IRS.
That will push the deadline for S Corp filers to Sept 15... even Oct 15 for many LLC and sole proprietors.
The problem is, with the crazy busy real estate market this year, maybe a late summer vacation, and now kids back in school, many Realtors still aren't ready to file!
So what happens if you file late?
No, you can't ask for another extension. You already got one - a six month extension - and you don't get another.
At least not without reasonable cause. What's reasonable cause? Think fire, natural disaster, serious illness and the like.
"I'm too busy" or "I don't have the money" don't qualify as legit excuses for avoiding IRS penalties and interest for filing late.
If you owe the IRS when you file late, the penalties and interest are worse.
The late-filing penalty is 5% of the tax due for each month (or part of a month) that your return is late.
If your return is more than 60 days late, the minimum penalty is $435, or the balance of the tax due on your return, whichever is smaller.
The maximum penalty is 25% of the tax due (!).
If you can't afford to pay all the tax that is due, you should still file and pay as much as you can.
- if you pay as much as you can now, you reduce the penalties and interest
- if you can't pay anything, go ahead and file anyway. You can then set up a payment plan or arrange another plan to settle your tax debt.
The mistake many agents make is they don't file, don't pay, and then end up repeating the same thing the following year. I've seen in countless times, and the problem only snowballs.
It's not easy pressing forward if you're behind on your filings or your payments, but the best course is to always press forward and take action. Don't play ostrich; call the IRS and see what can be arranged.
Or, tap a professional to help you, particularly if you have fallen behind 2 or more years, and/or owe more than $10,000 in back taxes. That's when it pays to hire someone to represent you.
The tax savings and stress you save should greatly surpass the fees you pay for an Enrolled Agent or tax attorney to deal with the IRS on your behalf.
Jim Flauaus, EA
Jim Flauaus is authorized by the federal government to represent taxpayers before the IRS in all 50 states. Learn more at https://anchortaxrelief.com, or contact him at 757-346-1040
Comments(2)