Are you late on your return?
What happens if you don’t file your taxes? Well, delinquent returns, unpaid taxes, and unfiled reports will all get you in trouble with the law. Everything from hefty fines, audits, fees, and even persecution could occur. That’s why we’ve outlined what to expect from filing late below.
It’s Costing You Money
If you don’t file on time the IRS charges you a 5% per month penalty. This failure-to-file penalty will be charged for up to 5 months. If you don’t file for more than 60 days, you’ll be charged whatever is less: a minimum of 100% of the taxes you owe or the specified amount by the IRS. It’s important to note that this amount changes annually to adjust with inflation. But regardless of which is less, you will have to pay these fees in addition to the taxes you owe.
You should also know that if you owe taxes on a return the IRS will charge 0.5% per month. This failure-to-pay ensures that interest will also be collected on any unpaid balance from the day the return was due until the day that it is paid in full. This amount will be charged monthly up to 25%. However, it does not end there. Typically, interest will be charged to your unpaid taxes. This amount also changes based on your federal short-term rate, plus 3%.
So, if you owed any additional income tax for previous years, we would suggest sending as large a payment as possible. This will work to reduce the interest charges. Otherwise, interest will keep building until the total amount is paid.
It Can Get You in Trouble
If you are someone who continually ignores your taxes, you could have more than just fees to deal with.
The IRS could file a claim on your property (known as a federal tax lien) and even seize it. They could also have you forfeit your refund, file charges against you for evasion, and revoke your passport in the most extreme of cases.
You’ll Need Documentation
If you have a back-tax return, you’ll need the W-2s or 1099 forms you received for the year you’re filing for. These are needed to report your income. If you’re an employee, you will receive a W-3 form through work stating your salary and tax information. But, if you’re an independent contractor or have other sets of income, you might receive several 1099 forms from clients of a 1099-K form that records business transactions.
If you happen to be missing any information, you can also request missing paperwork from the IRS. They will be able to send you transcripts of your W-2s and 1099s from the last 10 years. This request can be made using Form 4506-T, Request for Transcript of Tax Return.
You will also need to use the original forms for the tax year you are filing. This means you will need to download the correct year from the IRS’s website.
You Have to Verify the Rules
Instructions and rules change every year when it comes to taxes. This means that the rules from the year you’re filing for could have changed. Using the wrong set of guidelines could mean you’ll be stuck having to refile if it’s incorrect.
If you have a delinquent return from a previous year, consider speaking to a professional. A professional, like us at A.P Accounting & Tax Services, are familiar with the laws and will ensure your return follows the correct protocol.
Whether you’d be interested in learning more, or knowing what services would benefit you, give us a call at 407-328-5001.
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