What happens if you don’t file your taxes this year?
Every year, every American who earns an income is expected to pay and file their tax returns with the IRS. It is an obligation and it is non-negotiable.
According to the IRS, they do not pursue criminal prosecution of individuals who fail to file their taxes provided they voluntarily file or make arrangements to file. However, failing to file your taxes can potentially have unpleasant and dire consequences. It is in your best interest to file your taxes as soon as you are able to in order to avoid getting into complicated situations.
Additionally, you will never know if you’re due a refund if you don’t file your taxes. Refunds on tax payments are pointed out to you when you file your tax returns.
The disadvantages of not filing your Tax Returns on time
Some disadvantages of not filing your tax returns include:
- Accumulation of interests and penalties on the amount of your tax liability.
- The IRS may prepare a substitute return for you based on the copies of W-2s and 1099s they’ve received from the payers as well.
- You will lose the interest on your refunds
- Losses will be carried forward.
Attempting to escape paying tax completely and filing your tax returns is not an option if you ever want to buy a house or a car. Tax return history is one of the usual things that will be requested from you when you want to make a large purchase. This is because if you’re getting a loan, they want to be sure you’ll be able to pay back the loan.
This year, the deadline for filing taxes was shifted by the IRS due to the Coronavirus pandemic. Instead of March, the deadline was shifted to July 15. People were given an extra 3 months to file their taxes due in 2019 without necessarily incurring penalties and interests.
If you didn’t file your tax this year, you have incurred some financial repercussions.
The “failure to file” penalty is attracted when you fail to file your taxes at the appropriate time and it simply means 5% of your unpaid tax for each month your tax is late.
The failure to pay penalty, on the other hand, is the second option for penalizing defaulting taxpayers, and its consequences are less steep than that of the “failure to file” penalty. If you file your tax but do not pay, you will attract the “failure to pay” penalty which basically implies that you will be in charged 0.5% of the unpaid tax for each month you do not pay. This amount can, however, be increased by up to 25%.
It is advisable to file your tax even if you can not afford to pay it immediately. This is to avoid unpleasant repercussions emanating from both the “failure to file” and the “failure to pay” penalty. The “failure to file” penalty is usually greater than the failure to pay penalty in most cases.
Additionally, if you are yet to file your due tax returns, you can file for an extension. This will buy you time to complete the necessary processes.
Shying away from your taxes is unadvisable. It is simply putting off what you have to do now until later. It could also lead to some unpleasant situations. For example:
– The IRS can claim your property (Tax lien)
– They (the IRS) can completely seize your property.
– You can be charged for tax evasion
– You can lose your refunds
– The IRS can revoke your passport.
We are a tax relief firm dedicated to giving you the best results regarding resolving your tax debts. Our team of qualified professionals is available round the clock to provide you with the assistance you need. Contact us now at 888-585-8629 or 617-430-4674 or send us an email at [email protected].
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