If your business brings in revenue, you owe taxes. For owner-operators, the tax deadline always comes after the toughest time of year for the industry. Many found they were short on cash when it came time to file because they did not budget for taxes. Here is some advice for taxpayers who missed the tax-filing deadline.
- File as soon as possible. If you owe federal income tax, you should file and pay as soon as you can to minimize any penalty and interest charges. There is no penalty for filing a late return if you are due a refund.
- Penalties and interest may be due. If you missed the April 15 deadline, you may have to pay penalties and interest. The IRS may charge penalties for late filing and for late payment. The law generally does not allow a waiver of interest charges. However, the IRS will consider a reduction of these penalties if you can show a reasonable cause for being late.
- E-file is your best option. IRS e-file programs are available through Oct. 15. E-file is the easiest, safest, and most accurate way to file. With e-file, you or your business service provider will receive confirmation the IRS has received your tax return. If you e-file and are due a refund, the IRS will normally issue it within 21 days.
- Use a tax advisor. If your income is $57,000 or less, it may be tempting to use the IRS’ free e-file software to file your return or use software such as TurboTax. But with all the responsibilities and demands on your time, many truckers find hiring a tax professional can relieve the stress of preparing taxes. Choose someone who is familiar with the various technical terms and implications of taxes for trucking because they can decrease your tax liability. For example, ATBS tax professionals prepare more than 14,000 tax returns a year and consult with owner-operators and company drivers year-round to ensure their tax strategies are carefully and intelligently constructed.
- Pay as much as you can. If you owe taxes but can’t pay all at once, you should pay as much as you can when you file your tax return. Pay the remaining balance due as soon as possible to minimize penalties and interest charges. Look into paying your taxes with a credit card or other loan. The interest may be lower on these loans than the penalties and interest charges from the IRS.
- Installment Agreements are available. If you need more time to pay your federal income taxes, you can request a payment agreement with the IRS. Apply online using the IRS Online Payment Agreement Application tool or file Form 9465, Installment Agreement Request.
- Refunds may be waiting. If you’re due a refund, you should file as soon as possible to get it. Even if you are not required to file, you may be entitled to a refund. This could apply if you had taxes withheld from your wages, or you qualify for certain tax credits. If you don’t file your return within three years, you could forfeit your right to the refund.
Many owner-operators don’t realize they have built up a substantial tax liability. The last thing an owner-operator needs is to lose their profits to the IRS in penalties. If you haven’t filed your taxes, it’s time to start taking action so you do not drastically increase what you owe to the IRS. Use this advice to start making a plan to pay off your tax liability. For more information, visit IRS.gov or call ATBS at (888) 640-4829.