1. FILE YOUR TAX RETURN WITH REVENUE ANYWAY
This is extremely important. One of the worst things that anyone in financial difficulty can do is simply not file their tax return and plan to deal with it sometime in the future. If you do not file your tax return on time, you will automatically be charged a late filing fine. If you are less than 2 months late in filing your tax return, your total tax bill will be increased by 5% as a late filing penalty. If you are more than 2 months being late, your tax bill will be increased by 10% as a late filing penalty.
2. PAY AS MUCH OF YOUR TAX LIABILITY AS POSSIBLE
As you should be aware, when you file your tax return you are required to pay both the balance on your current year tax return and also preliminary tax for the coming year. We often encounter many people who are struggling to pay both. If you cannot meet both liabilities, then you should prioritise settling your current year tax liability before worrying about the upcoming one!.
After you know how much you can pay towards your current tax bill before the deadline and also what the remaining balance will be, the next step is to contact Revenue as soon as possible to try and arrange a payment plan for the remainder. This is known as an “installment arrangement”. In simple terms this is an agreement with Revenue to pay the balance to them in monthly installments over an agreed period of time. In order to agree an installment arrangement with Revenue they may request backup documentation to support your position, but generally they are willing to work with taxpayers who are in difficulty and who are pro-active in trying to deal with it by contacting Revenue.
4. PAYING PRELIMINARY TAX
Although it is a requirement to pay preliminary tax at this time, there are no late filing penalties for not doing so. Instead the worst-case scenario is that you will be charged interest for late payment of taxes. If cash flow is tight therefore the best thing to do is firstly pay your current tax bill and then pay whatever amount, however small, that you can towards your preliminary tax. You can then make further payments towards your preliminary tax bill as you have monies available to do so.
HOW CAN KEARNEY NAUGHTON & CO HELP?
We can assist you with all of the above if you require advice, support or assistance so please do not hesitate to contact us.