For most small business taxpayers filing schedule C with their personal income tax return, the filing deadline has now passed. If you haven't already filed your return or requested an extension, it's now too late to do so. However, you can minimize the damage and the associated expense by following these simple steps.
- File your tax return as soon as possible.
After you have missed the filing deadline, you will likely owe a failure to file penalty that will continue to increase as more time passes. You can reduce the amount of this penalty by filing the return as soon as possible. However, it's also important to make sure that your tax return is accurate and complete before you file to avoid additional problems.
- Pay your balance immediately.
Whether or not you remembered to request a tax extension before the deadline, your income tax will still be due at the same time. An extension is only an extension of time to file, not to pay! Taxpayers who owe a balance on the due date will pay a failure to pay penalty that increases over time, much like the failure to file penalty. If you haven't already paid what you owe, do it as soon as possible to minimize your penalties. Even if you can't pay the full balance you owe, you can still reduce your penalties by paying as much as you can.
- Pay your penalties.
In addition to filing your tax return and paying your balance, you should also pay any penalties and interest you owe to get a clean slate with the Internal Revenue Service.
- Apply for a payment plan.
If you know you won't be able to pay the full amount you currently owe to the IRS, consider applying for a payment plan to lighten the financial burden. If you think you may need a payment plan, apply as soon as possible to limit the interest and penalties accumulating on your balance.
- Make a plan for future tax years.
Nothing is more stressful than realizing that you won't be able to file your tax return and/or pay your balance before the IRS deadline. You can prevent this problem from happening again in future tax years by making a solid tax plan now. Depending on your situation, this plan may involve keeping better records, managing your income differently, and making estimated tax payments throughout the year.
The best way to develop a successful tax plan for your small business is to consult an experienced tax professional.
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