What Consequences Will Result from Your Failure to File Taxes?

Dec 02, 2023 By Triston Martin

Even though certain people in the United States with modest incomes are not legally obligated to file tax returns, the Internal Revenue Service normally expects taxpayers to do so if they earn more than a particular amount.

If you are required to file taxes but choose not to, you may face financially burdensome repercussions. If you fail to file your tax return and make taxes when they are due, the Internal Revenue Service (IRS) may assess penalties and interest on your account. In addition, submit your return within 3 years of the date it was due to avoid having any refund due to you canceling out. You need to be aware of this information if you still need to submit your most recent tax return.

Can You File Your Taxes Late?

Even if you miss the yearly tax deadline, which is usually on April 15 (or October 15 if you ask for an extension), you can still file your return. The deadline for extensions is often October 15. However, if you last filed a few years ago, the IRS will normally ask you to file tax returns for the prior six years to be in tax compliance.

What Happens If You Dont File Taxes

Failure To File Penalty

The Internal Revenue Service may charge you with a failure to file a penalty if you don't file your tax return promptly. The amount of the penalty is determined by the total amount of any taxes that have not been paid and the return filing date.

The tax balance that is reported on your federal income tax return is referred to as "unpaid taxes." This balance is calculated by subtracting any payments made throughout the year, such as payments made via withholding taxes.

Failing to file a penalty is equal to five percent of the amount of taxes that have not been paid for each month or partial month that the tax return is late. On the other hand, the Internal Revenue Service will not impose a penalty of more than 25% of the tax that was not paid. In addition to the penalty, the IRS will levy interest on it.

Failure To Pay Penalty

If you do not pay the tax that you report on a tax return by the due date or an allowed extended due date, you may be subject to a penalty known as a failure to pay the penalty. The amount of the penalty is determined based on a percentage of the taxes you owe but did not pay: 0.5% of the taxes you owe but have not paid for each month that the debt remains overdue. The Internal Revenue Service may assess a penalty of up to 25 percent of your overdue taxes. Additionally, the IRS tacks an interest charge to the penalty amount.

The Internal Revenue Service will lower the total amount you owe if you have to pay the penalty for failing to file your tax return and for failing to pay your taxes within the same month. The total late fee is five percent of the monthly or prorated portion of the monthly payment that your return was overdue by.

Substitute Tax Return

If you don't file your taxes, the Internal Revenue Service (IRS) may file a tax return on your behalf, referred to as a replacement tax return. The Internal Revenue Service (IRS) will generate the return using information about your income provided by a third party, such as the W-2 and 1099 tax forms. Still, the agency will not give you credit for any tax deductions or credits for which you may be eligible.

If the Internal Revenue Service files a replacement return on your behalf, you will have ninety days to file any overdue returns or a petition with the United States Tax Court. The Internal Revenue Service will then continue with the substitution and charge you for any taxes owed if you do not take action.

How Late Can You Receive A Tax Refund?

It is in your best interest to file your tax return as soon as possible if you anticipate receiving a tax refund. When you file your return with the IRS within three years of the date it was originally due, you can request a refund. If you file your taxes within that period, you can avoid having your return reduced or canceled.

Let's imagine you still need to submit your tax return for 2019, which was due on July 15, 2020. If you believe you should have gotten a refund for 2019, but you still need to file your tax return for that year before the due date of July 15, 2023, you will not get the refund. Also, remember that you are required to file a tax return for 2019 even if you do not satisfy the conditions for filing taxes. The most advanced tax software available now will be of use to you in completing the task.

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