As an independent contractor, it's important to file your taxes on time to avoid penalties and interest charges. However, sometimes unexpected circumstances can cause you to miss the tax deadline. If this happens, and you didn’t file an extension, there are a few steps you can take to minimize the damage.
If you haven't filed or paid your 2023 taxes yet, don't worry, ATBS can help you get caught up! Click here to request more information or get started.
File as Soon as Possible
Even if you miss the tax deadline, it's important to file your taxes as soon as possible. The longer you wait, the more penalties and interest charges you'll accrue. If you owe taxes, the IRS charges different penalties for filing and paying taxes after the deadline. The failure to file penalty is 5% of the unpaid tax for each month, with a cap of 25% at five months. The failure to pay penalty is 0.5% of the unpaid tax for each month. This penalty also caps at 25% which can take up to 50 months (4.2 years).
Another thing to keep in mind is the IRS also charges interest. The interest rate the IRS applies to a balance due is determined by the IRS each quarter and may vary.
Pay What You Can
If you can't pay your full tax bill by the deadline, it's important to pay as much as you can as soon as you can. As mentioned earlier, the IRS charges interest on the unpaid taxes, so the quicker you pay, the less interest you'll owe in the long run. You can make a payment online, by phone, or by mail using the payment voucher that came with your tax bill.
If you can't pay your full tax bill, you can consider setting up a payment plan with the IRS. This allows you to make smaller payments over time to pay off your tax bill. To set up a payment plan, you'll need to file Form 9465 with the IRS. You can choose from several different payment plans, depending on your financial situation and the amount of your tax bill.
Don’t Let This Become a Habit
If you have failed to file your taxes, you will eventually be sent a series of notices once a tax return is determined to be delinquent. Do not ignore these notices! The best chance of getting off this path is by working towards a solution as soon as possible and filing your taxes.
Letters from the IRS will not go away, and they will increase in severity. Ignoring these letters may eventually lead to garnishment of wages or settlements. Do not let it get this far! Getting out of trouble with the IRS is a difficult thing to do. If you’re behind on your taxes, the sooner you work to file your taxes and get compliant, the better the options available will be. Then, make sure you continue to file your taxes on time in order to avoid getting in trouble again down the road.
Seek Professional Help
If you're unsure about how to proceed or you need help navigating the tax system, consider seeking professional help. A tax professional or accountant can advise you on the best course of action and help you file your taxes correctly and on time.
At ATBS, we have an experienced team of experts in all things related to truck driver taxes and the IRS. We can work with you to get caught up on your past-due taxes and help you stay in compliance throughout the rest of your trucking career.
We will help you avoid worsening any potential tax problems that you might have and get you back on the road to success. These issues are common and can happen to anyone, but that’s why we’re here.
So What Should You Do if You Miss the Tax Deadline?
Missing the tax deadline can be a stressful experience, but it's important to take action as soon as possible to minimize the damage. The key is to file your taxes and pay as much as you can as soon as you can. And if you're feeling overwhelmed or uncertain about what to do, seeking professional help can be a wise decision. By taking these steps, you can avoid further penalties and interest charges, and get back on track with your taxes.