You’ve had just over a month longer than usual to file your freelance taxes due to the IRS extension of the annual tax deadline to May 17. However, if you were stressing about paying your tax bill back in April, it’s doubtful that you are feeling more confident about it now. With that said, if you haven’t filed your freelance taxes because you can’t pay your tax bill, it’s only going to hurt you in the long run. Now’s the time to get your taxes filed and make a plan to take care of your remaining tax obligations as soon as possible.
Here’s what to do if you can’t tackle your freelance tax bill when you file your return:
The IRS generally does reduce the “failure to pay” penalty amount for any month where both a failure to file and failure to pay penalty applies. However, these penalties are still charged each month—or part of a month—that your return is late, for up to five months. If you think the IRS isn’t watching the calendar, think again, they will still charge penalties even if your return is filed less than 30 days late.
Bottom line here: If you can’t pay your taxes in full and your balance is a moderate amount, it’s better to pay monthly than to wait and keep accruing interest and late payment fees. If you’re really in deep and owe the IRS a lot of money, keep reading, we will address some options below.
The IRS also applies late payment fines to estimated taxes. These are calculated separately for each quarterly installment of estimated taxes. The number of days late is first determined and then multiplied by the effective interest rate for the installment period. Note that the next estimated tax payment is due June 15, 2021.
The May 17 filing window for your freelance taxes is closing quickly…
With the tax filing deadline just a few days away, it’s time to get your freelance taxes filed and paid—in full if you can. If it’s just not possible to pay your taxes, make every effort to file your return on time or request an extension to avoid paying the IRS more than necessary.
Keeping current on tax payments is no easy task when you are a freelancer. If you are facing a tax bill you can’t pay or tax problems from previous tax years, be sure to reach out to a tax professional. They can help you manage your individual tax situation and create a plan to help you take care of your freelance taxes now and in the future.
Jonathan Medows is a certified public accountant licensed in New York, New Jersey, Maryland, and Pennsylvania. He is also a recognized expert in taxation for freelancers and the self-employed—often tapped for his expert knowledge and perspective on self-employment taxation by national and regional publications such as The New York Post, BusinessWeek, Forbes taxation blog, WebCPA, CPA Practice Advisor, and others. You can read some of Jonathan’s press coverage here.
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