30-Day Countdown: How to Tackle Back Taxes and Tax Debt
The 2017 income tax deadline is on April 30, 2018. Have you filed your taxes yet? If you’re waiting or afraid to due to back taxes or because you’ll owe a tax debt, read on…
If you have back taxes:
When you owe back taxes, the best thing you can do is consult a financial professional before the income tax deadline. Don’t try to negotiate with CRA directly — that can be a dangerous game. A debt consulting organization can help you take stock of your situation and make a repayment plan. DebtCare Canada has one of the only programs that can resolve a CRA back tax problem.
If you’ll owe a tax debt:
Not filing because you know you’ll owe? That’s about the worst thing you can do. Tax evasion is illegal, but it’s not illegal to owe. Failing to file your taxes before the 2017 deadline will only lead to more trouble — namely CRA interest and penalties.
In 2018, CRA starts charging interest on May 1, 2018 at a daily compound rate. And CRA late-filing penalties are also hefty: 5% of your 2017 balance owing, plus 1% of your balance owing for each full month your return is late to a maximum of 12 months. Plus, if you’ve been charged a late-filing penalty in a previous year, you could be charged 10% of your balance owing, plus 2% for each full month your return is late for up to 20 months.
The key is to avoid enforcement action. CRA is powerful and can garnish wages and freeze your accounts even without a court order. They will come after you, and fast. And if you can’t pay in full, CRA may negotiate with you, but it’s not likely to be to your benefit.
What can you do instead? Don’t contact CRA until you know how you will proceed. They will use your information against you.
If you owe a tax debt, don’t delay filing, but do consult a financial professional. With 30 days to the deadline, you still have time to do so. A debt counsellor can help you explore your tax debt repayment options.
DebtCare Canada offers one of the only solutions that stop CRA, freeze CRA interest, stop collection action, and can actually reduce the principal tax debt.
Call us today for a free consultation at 1-888-890-0888 or visit us online at www.debtcare.ca.