Hey there, busy entrepreneur! So, you missed the tax filing deadline, huh? No worries—it happens to the best of us.

This article will help you navigate this hiccup without breaking a sweat. So let’s dive in and get you back on track!

Step 1: Don’t Panic! It’s Fixable

First things first, take a deep breath. Missing the deadline isn’t the end of the world, and it doesn’t mean you’re in big trouble. Life happens, and the IRS understands that, too. The important thing is to act quickly and responsibly.

Step 2: File Your Tax Return As Soon As Possible

It’s too late to request a six-month extension of time to file your tax return. So, the sooner you file, the better.

Even if you can’t pay the full amount owed right now, filing promptly can help minimize penalties.

The IRS charges several kinds of penalties:

• Failure to file penalty. If you miss the tax deadline and don’t file an extension, the IRS charges a failure to file penalty. This late filing penalty is 5% of the unpaid balance for each month or partial month your tax return is late. It caps at 25% of your balance.
• Failure to pay penalty. If you don’t pay the tax you owe by the April 15th deadline, the IRS charges a failure to pay penalty of 0.5% of your unpaid tax per month or partial month, up to a maximum of 25%. When both the late filing penalty and late payment penalty apply to the same month, the IRS reduces the failure to file penalty by the amount of the failure to pay penalty so that maximum penalty is 5% for any month.
• Failure to pay proper estimated tax payments. If you owe more than $1,000 when you file your tax return, you could be subject to an underpayment of estimated tax penalty. The IRS calculates this penalty by figuring out your required estimated payments for each quarter of the tax year and multiplying the difference between what you paid and what you should have paid by the applicable interest rate for that period. This means you could owe a penalty even if you’re due a tax refund.
• Interest. Interest also accrues on unpaid taxes from the tax deadline until the date you pay in full. For the 3rd quarter of 2024, the IRS interest rate is 8%, or 10% for large corporate underpayments. That rate changes every quarter.

While these penalties can significantly increase your tax liability, remember, it’s just math. We can work through it together.

Step 3: Pay What You Can

Do you owe taxes and can’t afford to pay the full amount? That’s okay. The IRS offers several payment options, including installment agreements and short-term extensions.

While payment plans can provide some penalty relief, you will still owe some penalties and interest until your tax debt is paid in full.

Paying as much as possible when you file reduces the interest and penalties you’ll owe. Think of it like making a down payment on a solution.

Step 4: Communicate with the IRS

Communication is key! If there’s a good reason you missed the tax deadline, like a natural disaster, serious illness, or other unforeseen circumstances, you might be able to get the penalties reduced or even waived.

Even if the deadline just slipped your mind and you don’t have a great excuse, it’s a good idea to call the IRS to discuss your situation if you owe money you can’t afford to pay.

The IRS is surprisingly understanding when you reach out and explain your situation. An IRS representative will help you review your options, whether that means setting up a short-term payment plan, a longer-term installment agreement, applying for an offer in compromise (OIC) or placing your account on currently not collectible (CNC) status.

Step 5: Learn for Next Time

Okay, you’ve handled this year’s tax issue—now let’s ensure it doesn’t happen again! Set reminders, keep better records, and consider hiring a professional (like NewWay Accounting) to help keep your finances in order.

Trust me, while working with a professional is an investment, it’s worth having peace of mind knowing you wont miss a tax deadline, face a surprise tax bill, or have to deal with the IRS on your own again.

File Your Taxes On Time with NewWay Accounting

Missing the tax filing deadline can be stressful, but it is manageable. With prompt action, a clear plan, and a little help from a tax professional, you can overcome this hurdle and keep your business thriving. Remember, every successful business owner has faced challenges—it’s how you handle them that counts.

So, let’s get those taxes sorted and get you back to doing what you do best: running your business. Need more help? Contact NewWay Accounting. We can get your books in order, communicate with the IRS, file a tax extension if needed, and calculate quarterly estimated payments to help you avoid the penalties and interest you’ll face from a missed tax deadline in the future.