The filing deadline for C Corps, Estate, Trust, and Personal Income Tax Returns is this coming Tuesday, April 18th. Here’s a quick list of things to do before then.
1 – File Your Return And Pay Any Amounts Due
Enough said.
2 – File An Extension
If you cannot file your actual return, then please file an extension. This will automatically give you another 6 months to file the return and will stop a failure to file penalty if it is filed within the extension deadline.
3 – Make A Deposit
If you file an extension and believe that you will ultimately owe taxes, then make a deposit with the extension. The extension does not extend the due date of any payment owed, which remains next Tuesday. If you make a deposit that actually covers the tax due, you will avoid most of the additional penalties that could be assessed.
4 – What If Your Return Is Done And You Cannot Pay Your Taxes?
a – Avoiding the problem won’t make it go away. Sticking your head in the sand is the worst thing you could possibly do.
File your return and pay as much of the liability as possible. The Service will send a bill for the unpaid amount which will include penalties and interest.
b – If the amount owed is less than $25K, then you can go into a payment plan. The Service allows these plans to extend up to 72 months.
It should be noted that a payment plan is usually nothing more than putting a band-aid on a wound. Keeping the plan current will stop further collection actions from the Service. But you should save your money on the side and pay it off as quickly as possible.
5 – Keep An Eye On The Future
One of the biggest mistakes I’ve seen is people getting into tax trouble who do nothing but focus on the past. These situations tend to snowball in a way that never ends.
Let’s say you owed $25K for 2019. Okay. You spend 2020 trying to pay it, and get it down to $10K, but then you owe another $35K for 2020 because your company grew. The same sort of thing happens again in 2021. Before you know it, you’re in a situation that’s untenable.
In order to get off the hamster wheel, you need to focus on being properly deposited for the current year. Once you get your current taxes under control, you can put all of your old problems into a payment plan, and end the nightmare once and for all.
Either way, not dealing with it will only make the situation worse.
Enjoy your weekend. It looks like it’s going to be a nice one.
We’re all going to get through it. Let’s get through it together.
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Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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