What to do if you’ve filed taxes, but haven't paid

Your client filed her federal tax return by April 15 but did not include a check for the amount due, because she did not have funds available. She has come to you for advice as to how to proceed.

APR 29, 2009

By Bloomberg

Situation: Your client filed her federal tax return by April 15 but did not include a check for the amount due, because she did not have funds available. She has come to you for advice as to how to proceed. Solution :< /b> Your client may request an Internal Revenue Service installment agreement, pay the tax liability by credit card or make an electronic payment. If you client does not have the funds readily available since filing her return by the due date, the best advice would be to instruct her to apply for an installment agreement. Your client will accumulate interest and penalties until the entire tax liability has been paid in full. Therefore, the sooner your client fulfills her obligation, the less in interest and penalties she will pay. The failure to pay a penalty is .5% per month or part of a month, up to a maximum of 25%. of the amount still owed. The penalty rate is cut in half to 0.25% while a payment plan is in effect. You client can apply for an installment agreement, which would allow your client to make payments of tax owed in monthly installments. If the amount owed is less than $25,000, she may apply electronically via the IRS’s website at (click on Individuals, then on Online Payment Agreement Application). The IRS will charge a setup fee of $105, or $52 if the payments are deducted directly from a bank account. Your client may consider charging her tax liability to a credit card. If she chooses this option, the credit card company may charge her a convenience fee of 2.5% of her tax payment. Therefore, if her tax liability balance is $10,000, the convenience fee could be $250. However, this fee is tax-deductible as a 2% miscellaneous itemized deduction. If your client has gained access to funds since filing her return, she could have the funds electronically withdrawn from her bank account or use the Electronic Federal Tax Payment System (EFTPS). The payments can be made online or by telephone.

SEC to lose Hester Peirce, deepening a commissioner crisis

The "Crypto Mom" departure would leave the SEC commission with just two members and no Democratic commissioners on the panel.

Florida B-D, RIA owner pitches bold long-term plan to sell to advisors

IFP Securities’ owner, Bill Hamm, has a long-term plan for the firm and its 279 financial advisors.

Fintech bytes: Vanilla, Wealth.com forge new estate planning partnerships

Meanwhile, a Osaic and Envestnet ink a new adaptive wealthtech partnership to better support the firm's 10,000-plus advisors, and RIA-focused VastAdvisor unveils native integrations with leading CRMs.

Fiduciary failure: Ex-advisor who sold practice fined after clients lost millions

A former Alabama investment advisor and ex-Kestra rep has been permanently barred and penalized after clients he promised to protect got caught in a $2.6 million fraud.

Why the evolution of ETFs is changing the due diligence equation

As more active strategies get packaged into the ETF wrapper, advisors and investors have to look beyond expense ratios as the benchmark for value.

SPONSORED Are hedge funds the missing ingredient?

Wellington explores how multi strategy hedge funds may enhance diversification

SPONSORED Beyond wealth management: Why the future of advice is becoming more human

As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management

What to do if you’ve filed taxes, but haven't paid

Latest News

Newsletters

SUBSCRIBE

Subscribe for just $19.99 per month.