Forgetfulness and procrastination are two very human things to do. Everyone does that once in a while. If you miss a tax deadline due to forgetfulness or procrastination, you may wonder if you can just skip the whole troublesome thing. You always hear stories about people who do not file, ever, and get away with it. This makes you wonder if you can do it as well.
Admittedly, tax paying is never a fund activity. Everyone wants to avoid it as much as they can. However, filing for taxes also gives you fundamental rights which are greater than many personal assets. Filing even late is preferable to skip out the activity. Another side tax prep is also a responsible job, you can not keep the record properly according to the IRS. To avoid getting penalties you must consult to a tax attorney or CPAs experts.
Repercussions for Not Filing Taxes:
Non-filers usually face heavy tax penalties from the IRS upon missing deadlines. It causes them to pay even more in liabilities. Even if you find yourself in a financial situation where you cannot pay the full taxes, you shout still file for them. You can even get an extension by filing for it that can allow you additional time to pay the full amount later.
1. Hard to Get Away in this Digital Age
IRS is a huge organization. It is slow and too complex. It used to be quite common for the information to slip through the cracks. However, with the digital age, those cracks are rapidly closing up. IRS systems and softwares are becoming increasingly efficient and fast at sorting the hordes of information.
There are too many ways through which IRS receives information about you. Such as;
- An employer sends a copy of your W2 form to the IRS every year. The agency can correlate your tax returns with this form.
- The banks, investment companies and businesses send 1099 form to the IRS which contains information regarding your various modes of income. IRS receives information how much a real estate investor sold or rented a property for.
Sometimes, it takes a while for any discrepancies to come to light. However, with ever-evolving digital systems, those windows are getting smaller. If you do not file your taxes for whatever reason, they will find out and the consequences will not be pleasant.
2. Unnecessary Headache
Getting behind on your tax bills can become very stressful for you. In this day and age, it is better to take steps to lessen your avenues of potential stress and headache. It is better to set yourself a reminder which allows you to file your returns post-haste. In case of an error, you can always make amendments. Just remember to file before the deadline passes, so you may avoid potential penalties.
3. Longer Delays Invite More Serious Consequences
When the IRS determines you have not filed your tax returns, they will send you a notification and determine penalties. They can also create a tax return for you by themselves by compiling your earnings through secondary means; such as when your employer reported wages. However, this kind of return will not include any deductions or other benefits. This means you can end up paying a lot more than you should.
If you do not respond to IRS notifications, things get more serious. They can seize you accounts, put a lien against your property, or garnish your wages. All the while, interests and penalties keep piling up.
4. Follow the Guidelines
IRS has strict guidelines which indicate who needs to file a tax return. You need to file if your income falls at or above the minimum income threshold for filing. You can easily receive a refund if you are entitled to it. Do not ignore the guidelines even if you think you are not required to pay.
5. Pay Now, Even if it is Not the Full Amount
Many people do not file because they cannot afford their tax bill. This can mean they will end up paying a lot more later on. It is better if you file for your tax returns and pay whatever is available. You can file for an amnesty, extension or an installment plan; however, these options only become available once you file.
Keep in mind: The failure to file penalty is 5% per month based on the amount of your taxes.