If you neglect to file a tax return, you will be surprised when the bill comes rolling around. You are not able to just skip filing a tax return one year because it didn’t fit in with your schedule. You are required by law to file your taxes and not doing so carries consequences with it.
Yes. There are two different types of penalties. The first penalty is for not filing a tax and the second is for missing the deadline to pay your taxes. In fact, the fee for not filing is higher than the one for missing the tax deadline.
Typically, if you file your tax return late, but you are due to receive a refund, you will not be charged a penalty.
1. Just because you file for an extension does not mean that you will not be charged a late fee. If you want to avoid the late fee, you will need to pay at least 90 percent of the taxes you owe. If you do not, then a late fee will be applied to the account.
2. The fee charged to you for not filing your tax return is 5 percent. This means that you will be charged an additional 5 percent on top of what you already owe to the IRS. If you had simply filed and just missed the deadline to pay by, you would have only been charged a fee of .5 percent. That is a big difference.
3. Many people believe that there is a time frame that allows you to just not file taxes. For instance, if you wait three years then you do not have to file your taxes for that year anymore. This is a myth. While you cannot claim a tax refund after three years, you are required to still file your tax return and any amount that you owe will still need to be paid to the IRS.
You do not get a ticket that clears all of your backed taxes out and you will be responsible for paying them with penalties and interest.
In addition, if your tax return is older than a couple of years, you will no longer be able to e-file it and you must send in a paper application.
If you do not pay the taxes you owe, the IRS will eventually come hunt you down for the money. Typically, if you do not pay the taxes you owe, you could face jail time, but most commonly, you will incur more fees along with wage garnishments.
If the IRS is unable to garnish your wages for one reason or another, they will place a lien on your tax refund. This lien means that the IRS will withdraw the money they are owed from your expected tax refund first and then send the remainder to you, if any of the refund is left over.
If you are unable to pay your taxes right away, you do have a couple of options available to you. You should never ignore the IRS as this will only make the situation worse.
First, consider if you have an alternative way to pay. Maybe you can take out a personal loan or you can borrow some money from friends or family. Of course, never borrow money you cannot pay back and always work within a written contract to ensure both parties are protected.
If you cannot find an alternate way to pay, you can talk to the IRS about payment plans. Typically, the payment plans are flexible depending on how much money you make per year. Once you are on a payment plan, you will need to make the payments each month. If you have not paid the total amount by the time you get your tax refund the following year, the IRS will usually deduct the amount you owe them from this.
If you need help determining how much you owe in taxes or if you need to file tax returns for the previous couple years, contact your local tax professional today. He or she can sit down with you and look over your documents. You will gain a better understanding of your taxes and you will know how much you owe to the IRS.
Remember, never skip paying the IRS as they will come after you for their money.
Stephen Elmore