“The worst thing you can do is to do nothing. Taxes aren't something that just go away.”
The first step is to gather your tax documents for 2019, tax experts say.
“Get a mental checklist of, ‘Here's what I reported last year’ and ‘Do I have that document for this year?’” he says.If you realize you won’t be ready to file by July 15, you have the option of filing anBut there’s a catch: Even though an extension gives you until Oct. 15 to file, you’ll still have to pay any owed taxes by July 15.
The penalty for failing to file is more onerous than for failing to pay, however. The IRS will sock you with a “failure to file” penalty of 5% a month for up to five months, maxing out at 25%. The underpayment penalty is 0.5% per month, which also maxes out at 25%.Take advantage of IRA, HSA extensions
“A lot more people are in a hardship situation than before COVID hit,” Taylor notes. Some of those taxpayers may want to request an “” from the IRS, which allows taxpayers to settle a tax debt for less than they owe.
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