With the tax deadline behind us, if you haven’t filed you may be left thinking what now?
Well the time clock has been started, that’s what. When you file your returns late you will immediately be assessed a penalty. Tax Solutions Canada routinely helps individuals and companies who fall behind filing their returns. Did you know that:
- The 2012 penalty for late filing is 5% of the amount of the tax debt assessed, plus 1% monthly for up to 12 months?
- Now, it gets worse – if you also filed late in 2009, 2010 or 2011 your penalty may be increased up to 10% of the amount of the tax debt assessed and 2% per month for up to 20 months.
The two facts above support why, if you have missed the tax deadline or are many years behind filing your tax returns, it is very important that you act quickly. Time is not on your side as penalties and interest will continue to accumulate.
While monthly penalties stop accumulating, interest does not. In fact, the CRA will continue to compound interest until the tax debt is paid. Also, if you file late returns, interest will be assessed retroactively to the date that your returns were due. You may want to look into the IRS Fresh Start Program (use this link) if your debt has piled up and you are worried about how much debt you’ll be paying back over time.
Penalties and interest can really add up and make a tax debt difficult to pay. If you can pay the CRA can get very intimidating and begin to take collection and enforcement action that can range from making life uncomfortable to wreaking financial hardship on your household and business.
Penalties and interest are one reason that people actually avoid filing their tax returns. Because they anticipate that they will not be able to pay the tax debt, they simply avoid filing returns. This is not the answer and can have a major snowball effect – not to mention the fact that the CRA can notionally assess your tax returns at any time. When they do this they estimate what they think your income was, assess a tax debt, interest and penalties accordingly and then begin pursuing you for the money.
If you simply missed the deadline for 2012 and will owe little to nothing then get your late return filed, avoid further penalties and interest and move on.
If you are nervous because you know you are going to be facing a large tax debt that will be larger than what you know you can pay then you don’t have to go it alone. Companies like Tax Solutions Canada represent taxpayers who have tax problems and are finding it too difficult to negotiate with the CRA. They get in between you and the CRA with a mission to come up with a solution that involves payment or circumstances that the CRA will accept at a cost you can live with and that is fair.
This blog was provided by Tax Solutions Canada – “we help people who have tax problems”. If you would like to speak to a professional about your tax problem contact Tax Solutions Canada at 1-888-868-1400.