Part of the responsibility of an owner-operator is to avoid penalties and interest costs. Therefore, it’s a must to file their taxes on time.
Unforeseen events can make you miss the filing deadline; however, there are certain things you may do to reduce the damage if this occurs and you did not file an extension.
Below are some tax tips for owner-operators:
File As Soon As You Can
It’s crucial to file your taxes as soon as you can, even if you miss the deadline. Penalties and interest rates will increase the longer you wait.
The IRS imposes various penalties for filing and paying taxes beyond the deadline if you owe taxes. Each month’s failure to file a penalty is equal to 5% of the unpaid tax, with a five-month maximum of 25%. The failure to pay a penalty is equal to 0.5% of the monthly unpaid tax. The maximum penalty is similarly 25%, and it can take up to 50 months (4.2 years) to pay it.
The IRS also assesses interest, so keep that in mind. The IRS determines the interest rate it will charge on a sum due each quarter, and this rate is subject to change.
Pay What You Can Afford
It’s crucial to pay as much as you can as soon as you can if you can’t pay your entire tax obligation by the due date. Since the IRS charges interest on unpaid taxes, as was already mentioned, the sooner you pay, the less interest you’ll ultimately owe. Using the payment voucher that was included with your tax bill, you can pay via phone, mail, or online.
You might think about establishing a payment plan with the IRS if you are unable to pay your entire tax amount. This enables you to settle your tax debt over time with a series of smaller installments. You must submit Form 9465 to the IRS to establish a payment schedule.
Depending on your financial status and the size of your tax debt, you can pick from a variety of payment arrangements.
Avoid Making This A Habit
Once a tax return is found to be past due, you will eventually receive several notices if you failed to file your taxes. Do not disregard these warnings! The best chance of reversing this course is to file your taxes and strive for a resolution as soon as you can.
The severity of IRS letters will rise, and they won’t stop coming. Ignoring these letters could eventually result in settlements or wage garnishment. Don’t allow it to progress this far! It’s challenging to get out of difficulty with the IRS. The sooner you try to submit your taxes and become compliant if you’re behind on them, the better your alternatives will be. After that, be sure to keep filing your taxes on schedule to avoid running into difficulties again in the future.
Consult A Professional
Consider getting professional assistance if you’re unsure of what to do or if you need assistance navigating the tax system. Your best course of action can be suggested to you by a tax expert or accountant, who can also assist you in timely and accurately filing your taxes.
The IRS and truck driver taxes are two topics that our knowledgeable team of professionals at ATBS is well-versed in. We can assist you to catch up on your past-due taxes and ensure that you remain compliant for the remainder of your trucking career.
We’ll assist you in avoiding making any existing tax issues worse and put you back on the path to achievement. Although these problems are frequent and can affect anyone, we are still here to help.
You Missed The Deadline… Now, What?
Missing the tax deadline can be a stressful experience, but it’s crucial to act right to reduce the harm. The most important thing is to pay as much as you can as soon as you can and file your taxes. It can also be a sensible choice to seek expert assistance if you’re feeling overburdened or unsure of what to do. These actions will help you get back on track with your taxes and prevent additional fines and interest charges.
These are just some tips for owner-operators when paying their taxes.
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