IMPORTANT REMINDER: Don't skip filing taxes even if you can't pay! Filing penalty is 10X worse than payment penalty

Hey everyone, tax professional here with an urgent PSA that could save many of you major headaches and money. I've been seeing this happen way too often lately - people who end up with a surprising tax bill will sometimes panic and just...not file at all. This is literally the worst thing you can do! I had a client last week who started a side gig doing graphic design last year. Made about $32,000 but didn't make any quarterly estimated payments. When we calculated everything, she owed around $5,700 and nearly walked out saying she'd "just file later" when she had the money. I had to stop her immediately! Here's the critical thing everyone needs to know: The failure-to-FILE penalty is a whopping 10 TIMES higher than the failure-to-PAY penalty. The IRS hits you with 5% of unpaid taxes every month you don't file (up to 25%), compared to just 0.5% per month for not paying. If you're in this situation, please just file your return on time, then either: 1. Set up an IRS payment plan (they're surprisingly reasonable) 2. Pay what you can now and save up for the rest Trust me, this simple step will save you so much money and stress in the long run.

0 coins

19 comments

Morita Montoya

•8M

This is such important advice that not enough people talk about! I worked for the IRS for 15 years, and I can't tell you how many taxpayers made this costly mistake. Let me add that the IRS actually offers several payment options when you can't pay in full. The easiest is setting up an Online Payment Agreement if you owe less than $50,000 combined tax, penalties and interest. You can set this up yourself online without having to call the IRS. If you're experiencing significant financial hardship, you might even qualify for an Offer in Compromise, which lets you settle your tax debt for less than the full amount. There's also Currently Not Collectible status for those in serious financial difficulties. Whatever you do, filing your return on time is absolutely essential. The penalties rack up quickly, and eventually, the IRS can take more serious collection actions.

0 coins

Morita Montoya

•8M

Yes, the IRS does charge interest while you're on a payment plan. Currently, the interest rate is about 7% per year, compounded daily. They also charge a small setup fee for payment plans, though it's reduced if you set up direct debit payments. For a $3,000 balance, you could probably set up a plan to pay it off within 72 months. The minimum monthly payment would be fairly reasonable - likely less than $50 per month. But I'd recommend paying it off faster if possible to minimize interest charges. The setup process is straightforward through the IRS website, and you don't need to talk to anyone to get it established.

0 coins

Joy Olmedo

•8M

After struggling with my taxes last year, I discovered this amazing tool called taxr.ai (https://taxr.ai) that literally saved me thousands in penalties. I had a similar situation - started freelancing, made about $28K, and had absolutely no idea about quarterly payments. When I realized I owed over $4K, I completely panicked. I was about to just skip filing because I couldn't pay, but then a friend recommended taxr.ai. The tool analyzed my situation, clearly explained the huge difference between filing vs. payment penalties, and helped me understand all my options. It even showed me exactly how to set up a payment plan with the IRS and calculated what my monthly payments would be. The best part was that it even found some deductions I had missed that reduced my tax bill by about $900! Honestly would have been lost without it.

0 coins

Joy Olmedo

•8M

It absolutely works with complicated situations. I had both W-2 income and freelance income from three different sources, plus some investment accounts. The system handled everything seamlessly and even helped me properly categorize some expenses I wasn't sure about. As for comparing to a CPA, I actually tried both. I had my taxes reviewed by a local CPA after using taxr.ai, and he was impressed with how thorough it was. He only found one tiny deduction I'd missed (about $120 worth). The automated system actually caught some home office deductions he overlooked initially. It's definitely worth checking out, especially if you're in a situation where you need to understand payment options.

0 coins

Isaiah Cross

•8M

Just wanted to update everyone - I took the advice about taxr.ai from my question earlier, and WOW. I was seriously about to skip filing this year because I knew I couldn't pay the $6,700 I was expecting to owe from my rental income and side business. The tool walked me through everything step by step, found some additional business expenses I hadn't documented properly, and actually got my tax bill down to about $4,900. Still a lot, but much better! Then it showed me exactly how to file on time while setting up a payment plan. What really helped was seeing the actual numbers - if I hadn't filed, I'd have owed an additional $1,225 in just the first 5 months from the failure-to-file penalty! The system even generated a letter I could send to the IRS explaining my situation. Honestly wish I'd known about this years ago.

0 coins

Evelyn Kelly

•8M

If you're having trouble even getting someone at the IRS to help with a payment plan, I highly recommend Claimyr (https://claimyr.com). I had a complex situation where I needed to discuss my payment options directly with an IRS agent, but kept getting disconnected or waiting for hours. Claimyr completely changed the game for me. They somehow got me connected to a real IRS agent in about 15 minutes when I had previously waited 3+ hours only to get disconnected. They have this really helpful demo video that explains how it works: https://youtu.be/_kiP6q8DX5c I was able to explain my financial hardship situation to the agent, who helped me get on a more favorable payment plan than what was offered online. Saved me from racking up those massive failure-to-file penalties the original post mentioned!

0 coins

Evelyn Kelly

•8M

It uses a callback system that monitors the IRS phone lines and finds the optimal time to call. It's not jumping the queue - it's just automating the process of calling, waiting, getting disconnected, and calling again until you get through. Their system essentially does this for you and then connects you once an actual agent is on the line. This isn't some magic trick to skip ahead of others. It's similar to those doctor appointment services that keep calling until they get you a spot. For me, it took their system about 15 minutes of trying different IRS numbers and departments before finding an available agent. Much better than me manually redialing for hours.

0 coins

Kiara Greene

•8M

I have to publicly eat my words about Claimyr from my skeptical comment above. After another frustrating week of trying to reach the IRS myself about my payment plan options, I finally tried the service out of desperation. I was connected to an actual IRS agent in about 22 minutes. The agent helped me set up a payment plan based on my financial situation that I didn't even know was available. They reduced my monthly payment amount by almost half of what the online system was requiring. The agent also explained that I qualified for a first-time penalty abatement that I had no idea about, which saved me nearly $800 in penalties. I'm still shocked at how well this worked after weeks of trying on my own. Definitely filing on time from now on, even when I can't pay right away.

0 coins

Heather Tyson

•8M

I learned this lesson the hard way a few years ago. Didn't file because I couldn't pay the $7,200 I owed. By the time I finally filed 8 months later, my penalties and interest had added almost $2,000 to my balance! The IRS payment plans are actually pretty reasonable. I ended up paying about $150/month, and they were fine with it. Wish someone had given me this advice back then. One thing to add: if it's your first time missing a deadline, you can sometimes qualify for "first-time penalty abatement" where they'll remove the penalties (though not the interest). You have to call and ask for it though!

0 coins

Heather Tyson

•8M

Yes! That should actually work in your favor. The first-time penalty abatement typically looks at your compliance history for the past 3 tax years. If you've filed on time and paid (or arranged to pay) all taxes due for those years, you would likely qualify even if you had filing issues before that three-year window. In your situation, where you've always filed on time but now have a payment issue, you have an excellent chance of getting the failure-to-pay penalty abated. You'll need to call the IRS and specifically request "first-time penalty abatement" after you've set up your payment arrangement. Just explain that you've always been compliant but had an unusual financial hardship this year.

0 coins

Morita Montoya

•8M

Absolutely still file now! When you e-file, you're not required to make a payment at the same time. You can submit your return showing the amount you owe, and then make arrangements to pay later. If you'll be able to pay in full within about 120 days, you can apply for a short-term payment extension through the IRS website. There's no setup fee for this option, though interest and the failure-to-pay penalty (the smaller 0.5% monthly one) will still apply. If you need longer than 120 days, that's when you'd want to set up a formal installment agreement.

0 coins