With the last day that you can file your tax return being Tuesday, April 18th most of you are probably glad to be done and have not thought about Uncle Sam for a week already. For those of you that did not pay your taxes this year, you might want to call a licensed CPA to discuss your options. There are a lot of things that could cause a far bigger headache than the act of doing your taxes.
Julius Green is a tax partner and a leader of the baker Tilly’s tax practice within the Philadelphia region. He recently discussed the possible troubles that could happen for those that let the deadline come and go without even filing. Of course, not everyone is guaranteed to suffer from these types of consequences, and everyone is going to have a different tax situation. However, there are a lot of things that could go wrong for those that do not file.
Pay a Penalty Fee
One of the things that could happen if you do not file is that you could have to pay a penalty fee. This means that you could possibly be paying a penalty that is as high as 5% of the taxes owed, with up to five months out, with the min amount being $135 paid, or as high as having to pay 100% of the owed amount.
Sometimes, you could fall into a rut where you have to pay penalty fee along with having to pay interest on top of it all. This is usually going to be figured out by looking at the federal short-term rate (and this is able to be from 1% to 4%), along with 3%, and all of this is able to add up to between 4% and 6%.
Get Notices from The IRS
Alright, so this one may not seem as bad, but noone wants to be getting letters from the IRS. However, if you are thinking about not filing this is exactly what you will be seeing. The IRS will give you a lot of chances to do the right thing before doing anything. Of course, most of the time people are going to panic when they have received a notice from the IRS and they just shove it in a drawer until they are able to find ways to handle the situation with some money.
However, the right thing to do has nothing to do with shoving it in a drawer and ignoring it. The right thing to do is reach out to the IRS and possibly discuss your pay schedule and when you can pay them.
Forfeit Your Refund
Of course, it probably makes sense to you that you would be giving up your chance at a refund if you owe money to the IRS. The IRS could hold onto you refund, or they could just never give it to you. This is all dependent on how long it takes you to file, and also depends on how they are currently handling situations similar to yours.
Bad Credit Scores
If you have a debt with the IRS that you are not paying off, you will be noticing that it is affecting your credit score in a very bad way.
Going to Jail
You may think that it would be unreasonable for you to get thrown in jail for something you were planning on paying for in the future, it can still happen. The U.S. government takes it very seriously when you don’t pay taxes, and there are instances where jail time has been applied.
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