Margaret Mitchell, acclaimed author of Gone With The Wind once stated, “Death, taxes and childbirth! There’s never any convenient time for any of them.” Then of course, there is the famous quote by founding father Benjamin Franklin we all know, “but in this world nothing can be said to be certain, except death and taxes.” Suffice it to say, paying taxes are just something we all have to deal with that’s pretty unpleasant. It makes it even worse when you are an independent contractor having to pay your own as well as an employer’s portion of Uncle Sam’s allowance.
However, even though the dreaded date in which taxes must be filed comes around every year like clockwork, life happens and sometimes, the tax date comes and goes without us filing. What happens then? Well, unless you are wanted for other crimes like Al Capone back in the day, you can rest assured this little oversight is not likely to land you in jail. However, that isn’t to say you don’t need to remedy the problem as quickly as possible. Here’s how:
I Missed The Tax Deadline, Now What?
File An Extension
If you are within 60 days after the deadline, you can file an extension, giving you more time to get your taxes completed and/or paid. Fill out form 8809 to file an extension. However, realize that even when you file late, if you don’t pay what you owe, you can still be looking at some fines.
Get Ready to Pay Some Fines
Unfortunately, if you miss the April 15th deadline to file your taxes and don’t have an extension in place, you will be expected to pay some fines for not filing. Although they aren’t horrible, they can accrue fast, so make sure you don’t put off taking care of them. The following is a breakdown of the current fines for late 1099 forms, which is what you as a freelance writer more than likely have:
- A fine of $50 for filing within 30 days of the deadline.
- A fine of $100 for filing more than 30 days late, but still before August 1st.
- A fine of $260 if you file on or after August 1st.
Be aware, if you are intentionally “not filing” your taxes, you can be subjected to a minimum fee of $530 per statement with no max!!!
You Will Have to Deal With Multiple Fees if You Don’t File And Don’t Pay
Let’s face it, sometimes you just don’t have the money you owe the government at the time. Don’t let this stop you from filing, though, because you will be charged a penalty fee for not filing. At the very least, if you go ahead and file your taxes, even if you can’t pay what you owe, you cut down on what the amount of fines you might face.
What if You Can’t Pay What You Owe?
When you don’t file your taxes, you can expect a rate of 5% to be added to your unpaid taxes per month. This will keep increasing until you have an additional charge of up to 25% on top of your tax bill. This again exemplifies why it’s so important that you file your taxes, even if you can’t pay what you presently owe. By setting up a payment option, like listed below, you will prevent more fees from accruing.
There Are Payment Options
If the thought of having to come up with money you don’t have to pay your tax debt is the reason behind your procrastination, don’t let this stop you any longer. You can apply for an IRS payment plan, see if you quality for an offer in compromise, which is a means to settle your tax debt for less than you owe, or even file a request for a temporary delay of the debt collection due to financial hardship. The IRS has many resources for this, so don’t let not having the money be the reason you don’t file. This will only make the problem worse. In addition, even if you take out a personal loan to pay your IRS debt, this is a better option, interest wise, then owing the government.
More Tax Questions
What If You Make a Mistake on What You Owe?
If you miscalculate and think you owe substantially less than you really do, you can be penalized for being negligent. This, of course, is not describing an honest math error, but a large mistake. If you do this, you can expect a 20-40% increase in what you have to pay. Don’t worry though; the IRS will not consider any negligence criminal in nature, other than intentionally lying or filing a false return. Then, you could be facing jail time.
What Might Trigger an Audit?
The word “audit” likely causes a shudder to pass through your body. After all, it is us independent contractors who are the most susceptible to them with our write-offs and home offices. In fact, according to Bench, sole proprietors are three times more likely to face an audit when compared with other taxpayers. Avoid the following to decrease your chance of being audited as an independent contractor:
- Failing to report income when it has been reported by another business.
- Taking huge deductions, like 100% of your personal car usage.
Follow the steps above to get your tax situation sorted out as soon as possible. Though it isn’t atrocious that you missed the deadline, don’t let fear or dread make the problem worse by avoiding the IRS and your tax responsibility. Happy filing!
Brandie P‘s career as a freelance writer spans several years and encompasses an abundance of niche specialties. Before beginning her writing career, she was an office manager and worked in the medical field. Her experience in these two fields have come in handy when writing topics pertaining to these fields.