On April 15th, the Tax Man Cometh
On April 15, the tax man cometh. Like it or not, filing a return on or before that date or getting an extension to file is the law. Filing is not a request, and severe penalties can and usually are imposed for failing to file or getting an extension to file. Before we get to the details of filing, make sure that your deductions are credible, not incredible.
Legitimate business expenses are deductible. One gutsy female, an exotic dancer who calls herself Chesty Love, was allowed a deduction for her breast implants, claiming they were "incurred solely in furtherance of the business engaged in." Most tax auditors would find that claim highly dubious. Medical expenses are another big area of legitimate deductibility. A doctor's prescription for a weight loss program or a swimming pool for weight control could be deductible, but one misguided man tried to deduct payments to prostitutes. He showed literature to the IRS auditor, claiming that sex has been shown to have positive health effects. The auditor found his claim to be largely dubious as well. Now, back to the looming deadline.
The penalty for late-filing is bad. It's typically 5% of the tax owed for each month or part of a month that the return is late. The IRS can charge that for up to 5 months or up to 25% of the unpaid taxes. Failure to pay penalties aren't nearly as severe. People who file but don't pay the taxes due on time are penalized by having to pay .5% percent on the money owed each month up to 25% of the total amount owed.
The failure-to-pay penalty is easy to avoid if you have paid 90% of the taxes owed by April 15. You can request an automatic extension of up to 6 months to file the return. The extension doesn't mean you won't have to pay all taxes due. It just eliminates unnecessary penalties. As you see, there is hope for you, even if you don't have all your paperwork together for filing the completed return by tax day. Good luck!