Tax season is quickly approaching, which may not be the most exciting news. We all hope for a quick and painless tax season, and perhaps a substantial refund, this time of year. Fortunately, there are ways of making the filing process easier, and thus more enjoyable. Below we sketch out some top tips for filing taxes in 2020, along with information on how to handle bankruptcy and the IRS.
Tips for Filing Your Taxes in 2020
1. Find a free filing service.
There are now many free tax filing services available online. The IRS offers their Free File option on their official website. For those who make less than $69,000 a year, Free File offers name brand software for filing federal taxes. Those who make more can find an electronic alternative to the traditional paper tax forms. You can also use Free File to get an automatic six-month extension for filing.
2. Set up a direct deposit.
The IRS also offers a direct deposit option which is the safest way to receive your refund. It also happens to be the quickest way. Nine out of ten refunds are direct deposited by the IRS within 21 days after filing. You can also track your refund through this online tool.
3. File your taxes even if you cannot pay.
Unfortunately, some make the mistake of failing to file out of fear that they cannot pay the taxes they owe. However, the penalties for doing so might be more costly than simply failing to pay. In fact, the IRS takes a failure to file and not paying on time as separate matters. This means each will incur separate penalties. Thus, you should file even if you cannot pay.
If you cannot pay your taxes in full by the deadline, you still have options. You can call a representative to discuss your situation and work out a plan for how to pay back taxes. In some cases, you may be able to reduce your penalties for failing to pay by the deadline. Fortunately, you cannot go to jail for not being able to pay your taxes.
Can You File Bankruptcy on Taxes Owed to the IRS?
If you cannot pay your taxes by the deadline, the IRS considers this tax debt. Each month that this debt goes unpaid, it increases. This is because the IRS charges both interest and a penalty fee on unpaid taxes each month.
In addition to working with the IRS on a debt management program, you may also have the option to file for bankruptcy. At the very least, filing for bankruptcy will trigger an automatic stay. When this happens, the IRS must stop any collection activities against you. Further, Chapter 7 or Chapter 13 bankruptcy can completely or partially discharge tax debt if:
- The debt is for income taxes.
- The tax debt is at least three years old and you filed returns.
- You did not commit tax fraud or willful evasion.
- You filed tax returns for eligible debt at least two years before filing bankruptcy.
- If the IRS assessed your tax debt, the assessment was 240 days prior to filing for bankruptcy.
Contact Our Kansas City Bankruptcy Attorneys
Tax season may be an especially tough time for those already struggling with debt. However, you should always file your taxes even if you cannot pay by the deadline. Putting in a good faith effort can help you negotiate a payment plan with the IRS. Further, this effort will help you in a bankruptcy should you pursue this option.
If you are wondering how to pay back taxes, speak with our experienced Kansas City bankruptcy attorneys to learn more about our services. For your free telephone consultation, give us a call at (816) 281-6349.