There are a lot of unpleasant repercussions for failing to file your taxes on time. Let us go through what may go wrong and how to fix it.
What you will discover:
What if you do not file your taxes?
What happens if you do not pay your taxes on time?
What can you do to catch up if you have not completed your taxes?
can you need the services of a tax expert, and how can you locate one?
Tax day may be unpleasant for many individuals, but it can be especially difficult for someone who has not done their taxes in a few years. The longer you wait to file your taxes, the more unpleasant your situation will become, so you may as well attempt to remedy it now. Especially when you consider the penalty costs that may be accruing.
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What if you do not file your taxes?
Failure to file your tax return or pay your taxes on time or at all might result in significant repercussions, such as:
Late filing penalties: The IRS will assess a Failure to File Penalty of 5% of the unpaid taxes you owe for each month or partial month your tax return is late, unless you are also assessed a Failure to Pay Penalty in the same month. In such scenario, the Failure to File Penalty for that month may be lowered by the amount of the Failure to Pay Penalty. The penalty, however, will not exceed 25% of the taxes owed.
Penalties for late payment: After the due date, the IRS will assess a Failure to Pay Penalty of 0.5% of the amount outstanding for each month or half month the tax is unpaid. The penalty, however, will not exceed 25% of the taxes owed.
Penalties and interest charges: Failure to pay your taxes on time may result in penalties and interest charges on the amount outstanding. Interest may be charged on delinquent taxes until the date of full payment. The interest rate is set quarterly and is based on the federal short-term rate + 3%.
Legal ramifications: Failure to meet your tax obligations may result in wage garnishment, tax liens and levies, and even incarceration.
The good news is that the IRS does strive to assist folks who come forward on their own and is often ready to work things out.
What happens if you do not pay your taxes on time?
If you fail to pay your taxes on time, you may face fines and interest costs. The amount of the penalty is determined by how late you are and how much you owe. In order to recover late tax payments, the IRS may pursue legal action against you. These measures may involve pay garnishment or asset seizure.
Failure to submit your tax return on time has a different penalty. If you believe you may owe taxes but do not have the funds to pay them, you should file your return on schedule and work out a payment plan with the IRS. Working with a tax expert may provide you with the assurance that your return will be completed properly and with your individual circumstances in mind. Returns may often be completed swiftly and electronically to ensure they are submitted on time.
What can you do to catch up if you have not completed your taxes?
Filing late tax returns is one approach to catch up on your taxes. The general stages are as follows:
Collect all of your tax paperwork and submit your tax returns. You will need your W-2s and/or 1099s for each year you have not filed your taxes. If you cannot find these records, you may request them from the IRS using Form 4506-T. You must submit a return for each year you did not file. Most firms that provide e-filing services have forms dating back at least two years. If you need to go back farther, you will have to obtain the paperwork from the IRS and send your returns.
Pay your back taxes. After you have filed your tax returns to the IRS and your state, you will want to pay any outstanding taxes and penalties. The list of fines is available on the IRS website. If you are unable to pay your whole bill, you will be charged interest until you are able to. There is no penalty if you are receiving a refund or did not owe any taxes.
Negotiate a payment arrangement with the IRS. If you are unable to pay what is outstanding in full, you may be eligible for a payment plan. If you are presently on a low income, they may have other possibilities for you. You may apply for a payment plan at the IRS’s website or by calling (800) 829-1040.
Going through the procedures of meticulously collecting information, preparing and submitting the appropriate paperwork, and calculating the appropriate fees may be difficult and time consuming. You are not required to accomplish this on your own. You may engage with a tax professional who can assist you in filing on time.
can you need the services of a tax expert, and how can you locate one?
In most circumstances, merely submitting and paying your tax returns will get you out of tax difficulties. However, it may be beneficial to consult with a tax attorney or tax filing specialist to ensure that you are conducting things appropriately and to learn about any other choices that may be open to you.
