Physicians, as dedicated medical professionals, your busy schedule can push tax filing to the corner. You blink, and suddenly the tax deadline has passed. Don’t worry. If you missed filing your taxes in 2024, you can still file a belated tax return.
In this blog, we will cover handling a missed tax deadline, filling out overdue tax returns, understanding the potential tax penalties, and strategies to ensure this doesn’t happen again next year.
What is a belated tax return?
As per Section 139(4), when an individual fails to file their income tax return by the ITR filing due date and has to file it after this date, such a return is known as a belated return.
It has to be filed before December 31st every year. In the United States, anyone who missed the tax filing deadline is eligible to file a belated return.
How do I file a belated return?
There is no penalty for filing a late return after the tax deadline if a refund is due. If you didn’t file and owe tax, file a return as soon as you can. The process for filing a belated return is the same as filing on time. You can use:
1. IRS-free filing:
The Internal Resource Service (IRS) partners with various tax preparation software companies to offer free filing services to eligible taxpayers. To use IRS-free filing services, the adjusted gross income should be $79,000 or less.
2. File Electronically:
If you don’t qualify for IRS-free files, The IRS strongly encourages its Free File Fillable Forms to be e-filed. This option uses the electronic version of the IRS paper form. To use the application, you must have a U.S. phone number that accepts text messages.
3. Request an extension:
In certain situations, like life events, use Form 4868 to request an extension. Form 9465 is a document you can file to formally request a monthly installment payment plan in the event you cannot pay what you owe from your federal tax return.
Communicate with the IRS
If you’re facing financial hardship, consider reaching out to the IRS to discuss your situation. They offer an installment agreement that allows taxpayers to pay off their federal tax debt in installments rather than a lump-sum payment.
To be eligible for an installment agreement, taxpayers must meet certain income and debt requirements and must file Form 1040-SR to apply.
Understanding Penalties
There will be penalties and interest for late filing of taxes and late payment. Failure to file a penalty applies when you don’t file your tax return by the due date.
Penalty
5% of the unpaid taxes for each month (or part of a month) your return is late.
Maximum Penalty
25% of your unpaid taxes.
Can I reduce my penalties?
Depending on your situation, you can attempt to have the penalties reduced. This allows you to explain why your return is late and plead your case for penalty abatement. Here are some examples of "reasonable cause" accepted by the IRS:
Serious illness of yourself or a family member
Natural disaster
Unexpected military deployment
Death in the family
Remember, the key is to demonstrate a legitimate reason for the delay. The IRS considers all the facts and circumstances on a case-by-case basis.
How do I avoid future mistakes?
Missing the tax deadline can be a stressful experience. Here are some tips to ensure this doesn't happen again:
Calendar Reminders
Set calendar alerts well in advance of the filing deadline. Consider setting separate reminders for gathering tax documents and for actually filing your return.
Organize your financial documents
It’s important to organize your documents throughout the year, and consider working with a tax professional if you need assistance.
Wrapping up
The IRS is generally more lenient with taxpayers who make a good-faith effort to comply.
By taking action now and filing your return as soon as possible, you can show your willingness to meet your tax obligations and minimize the financial impact of missing the deadline.
At Prime Financial Services, we're committed to empowering medical professionals through our seminars that cover a wide range of financial topics — From optimizing retirement plans to managing debt, insurance, taxes, and strategic medical practice finances, our sessions provide invaluable insights to secure your financial future.
Need help with taxes or filling them smoothly? Look no further! Visit pfinancialservices.com for experienced guidance and support.
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