There are certain things that are better to be unplanned. This can be true in terms of travel, dates, or parties, but not when it comes to filing your taxes. Your excuse that you work better under pressure will not be on your side this time around. Filing taxes can be a lot of work and requires sufficient amount of time to double or triple check. And once April 15th has passed and you haven’t filed your tax or asked for an extension, we’re not trying to scare you but there are things that might happen which you wouldn’t like.
Failure to file your taxes can lead to different penalties and troubles. It’s best to avoid it at all cost and file your taxes as early as possible. Then pay what you can if you cannot pay in full just yet. If you’re having problems documenting everything and does not know what to include in your statement, then ask for a professional help. Just make sure you don’t let time pass you by, or be prepared for the consequences listed below.
Late Penalties
The longer you wait to file your taxes, the higher the penalties you’ll face. IRS charges 5% of the total tax owed for each month it is left unpaid. But there’s a limit of 25% so if you are late by 6 months, you would still be charged 25% penalty. Don’t put yourself on that situation and expose yourself to more tax problems. It is also important to know that failure to pay is another penalty and you should expect interest from it. So it is better to file your taxes even if you don’t have the sufficient money to pay. Just pay what you can to lessen the penalties and interest.
Delay Your Refunds
If you fail to file taxes on time, then the IRS would also be late in giving you back your refunds. Even if the government owes you money, they can hold onto it as long as you don’t file your taxes and you can lose that refund after three years and will be forfeited.
Say Good Bye to Social Security
Yes, the IRS can attack your social security benefits under the Federal Payment Levy Program. This happens after appropriate notification process. They will seize this and can possibly cause you hardship.
Substitute for Return
If you fail to file your taxes, IRS can do it for you by filing a substitute for return. They will do this after several attempts to remind you of your obligation. However, this is something you shouldn’t be happy about. The return will not be in your favor, they will not include your tax credits and deductions thus making you get higher tax bill.
Imprisonment
While it is unlikely, it is possible to be imprisoned due to tax evasion charges. This happens when IRS sees that you’ve willfully failed to file or you file incorrect and fraudulent returns. This is not very likely if you are not doing anything against the law. And if you are, well, you shouldn’t.
Extension to File Your Return
Finally, we have one good thing on the list. If you wouldn’t be able to file taxes on time, you can ask for a 6-month extension from the IRS by filing the Form 4868 from the IRS. However, extension to file does not grant you extension to pay.
Filing your taxes can be a hassle if you don’t put enough time and effort in doing so. It is important to always be ahead of time to double check any mistakes and to avoid audits. On the other hand, failing to do so can cause you more harm and problems in the long run. Take your tax obligations seriously, because IRS certainly will.