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What Happens If You Miss Filing Your Taxes Due to a Death in the Family

My dad got sick and then died earlier this year. I ended up not filing my taxes. What is going to happen to me?

Losing a parent is devastating and can uproot your entire life, and having to go through an extended period of illness on top of it makes the situation even worse. The last thing you want to have to worry about is filing your taxes. Although the IRS charges a penalty fee for any late filing and late payment, in a situation such as yours, you may be able to get those penalty fees removed.

Normal Penalty Procedure

The normal penalty charge for late filing is 5 percent of your tax with a maximum payment of 25 percent. If you are more than 6 months late, then you owe a minimum of $135 or 100 percent of the tax. The IRS also charges penalties for late payment, but they are less. This is why it is best to go ahead and file even if you cannot pay your tax.

The late payment penalty is .5 percent of the tax, although this increases to 1 percent if you enter collective action or drops to .25 if you sign up for an installment agreement. Again, the maximum amount you will be charged is 25 percent. This means that if you continually do not file or pay your taxes, you could have an additional 47 percent (25 from late payment and 22.5 from late filing) to pay on top of your normal tax liability. This is on top of the interest that begins accruing the day after your tax return and tax are due.

The Chance for Penalty Abatement

In the situation like yours with a sick family member and/or a death in the family, the IRS understands that it may have prevented you from paying or filing on time. That is why they have implemented a program known as Penalty Abatement. As long as you have reasonable cause for not paying or filing, and extended illness and death in the family counts, then you can have some or all of the penalty fees waived. You do have to prove that the situation impacted you to such a degree that you were unable to file. This means that you also must show you did not handle any other big financial or business transactions during this time.

You also have to demonstrate that you did work with “ordinary business care and prudence” to get your taxes paid and filed when you were finally able to do so. That means you cannot go for years without paying your taxes or filing and blame it on an extended illness or death, unless it did affect you so severely that you also were unable to do anything else during those years. Instead, penalty abatement in this situation will benefit you for late filing or payment of a few months, at most a year. If it is your first time to be late, then you will also have a better chance of seeing the penalty fees waived.

Working with the IRS

Prolonged illness and the death of a close family member, like a parent, can affect us in so many ways. Many people find that handling certain things, like taxes, becomes difficult during this period. The IRS is not some heartless, mean organization just looking for your money. They understand that things happen that cause you to be late. That is why they have programs in place, like Penalty Abatement, to help you out in situations like these. It is important that you try to handle the situation as soon as you can to increase your chances of a positive outcome.

If you are unsure whether you qualify for Penalty Abatement or need help filling out the forms or working on another tax resolution, contact Fidelity Tax Relief at 877-372-2520. Our experienced and knowledgeable tax professionals will talk with you about your situation and develop the best plan of action.

Time is running out!​

When you owe money on your federal taxes, one of the common collection actions taken is IRS tax garnishment, typically on your wages or salary. Wage garnishment can leave a person with very little money on which to live. 

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