3 Answers to Common Tax Questions3 min read • March 27, 2019
As we reach the final stretch of tax season, one thing is certain: filing is as confusing as ever. With the deadline rapidly approaching, you may feel overwhelmed — or even embarrassed — to ask about certain things. We’ve answered three of the most pressing tax questions to ease the sting of last-minute filing.
I can’t afford to pay my taxes. What should I do?
Few things are more nerve-wracking than owing the IRS money — and it only gets worse when you can’t afford to pay. It may be tempting to ignore your tax problems, but unfortunately, they won’t disappear on their own. The best thing you can do is take action. You may have more options than you think.
- File on time even if you can’t afford to pay. Regardless of what you owe, it’s critical to file your taxes on time. Filing late could result in a whopping 5 percent of your unpaid taxes per month.
- Choose a realistic payment plan. The IRS offers more than one payment plan. Take a hard look at your budget and decide what you can afford to pay every month. You may also apply for an Offer in Compromise— which may allow you to pay less than you owe — with certain rules and fees attached.
- Be open if you can’t pay anything. If you are going through a rough financial situation and can’t make payments, be honest. The IRS may be willing to mark your account as “Currently Not Collectible.” But this won’t make your tax debt go away — it will continue to accrue penalties and interest.
I made a mistake on my taxes. What should I do?
Mistakes on your tax return may be another thing keeping you awake at night. It doesn’t matter who caught the mistake. What matters most is immediately taking action to correct it. The longer you ignore it, the more expensive it becomes — especially if you owe the IRS money.
When you catch your own mistake
If you have already filed, the deadline has passed, and you catch a mistake, you can mail an amended return. But if the deadline hasn’t passed yet, you can file a second tax return with the right information.
When the IRS catches your mistake
Sometimes, the IRS catches a mistake before returns are final. In these cases, you may receive a letter with specific instructions on how to correct the error.
Other changes you may encounter
There are several other reasons why your return may need changes. These may include an audit, a change from the IRS, or simply a change of address. If you aren’t sure how to proceed, call the IRS for instructions. You can learn more about these scenarios — and how to handle them — here.
I am missing my refund. What should I do?
If you have earmarked your tax refund for car repairs or paying off debt, delays can be frustrating. There are a few reasons your money may be missing.
- Check on the status of your refund. You can look for updates online, via the IRS mobile app, or by calling their hotline at 800-829-1954.
- Figure out why your refund is missing. After
checking on the status, it may be easier to guess what happened. If the IRS
mailed your payment, it may have been misplaced or taken. You can report either
of these here. If you are missing a direct deposit,
however, incorrect banking information or tax return preparer fraud may be to blame.
- The IRS may be holding your refund. To prevent fraud, there are a few reasons the IRS may hold your tax return. These may be related to certain credits — like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). Or, there may be issues like previous missing returns or paying off your tax debt.
Whatever you do, don’t ignore the problem.
Like most of life’s problems, tax issues don’t get better by ignoring them. Take a proactive approach. While you may feel alone, many others have dealt with the same — or worse — and the solution may not be as bad as you think. The sooner you begin, the less costly it may be.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.