If you missed the tax filing deadline, you should still file your tax return in order to prevent costly legal and financial punishment from the IRS. While missing a tax filing deadline is not the end of the world, there are a number of negative consequences to be aware of, such as the penalties that you may incur for not paying or filing, and what will happen to your refund if you are owed one but do not file your return.
It is important to understand the different levels of punishment that you may face for not filing your taxes, which include:
- Failure to File Penalty. The longer you wait to file your taxes, the larger the penalty. If you wait too long, your total tax liability can increase by as much as 25% in penalties and interest. There is no logical reason to give the IRS this extra money.
- Lost refund. If the IRS owes you a refund, you will not be charged the failure-to-file penalty; however, this does not mean that you can sit back and wait as long as you’d like before filing your return. Simply put, you cannot receive a refund from the IRS – no matter how small or big – until you file a return. At this time, the law states that you must file your return within three years to receive what you are owed.
- Earned Income Tax Credit (EITC). Are you interested in claiming the Earned Income Tax Credit? Even if you aren’t required to file a return, you must do so within three years of the original due date in order to claim the EITC.
- Statute of Limitations. Once the statute of limitations on filing your tax return expires, the law prohibits the IRS from issuing your refund check. Additionally, the law prevents the application of overpayment or similar credits to other years in which you have paid enough in taxes. For the IRS, the statute to collect outstanding taxes does not begin until after you have filed your return.
Regardless of the reason why you have not filed your taxes, you should file as soon as possible. Depending upon your situation, you should consider hiring a tax professional. Below is a guide on selecting a tax professional depending upon your tax situation.
- No Taxes Owed, Just Unfiled Returns: If you have a simple return it could be in your best interest to go to a tax prep location such as H&R Block, Liberty Tax or a local tax preparer. If your tax return is a bit more complex then it is a good idea to seek out a local CPA to help you file your return.
- Owe Taxes and Have Unfiled Returns (Can afford to pay what is owed): In this situation it is best to seek advice of a qualified tax professional. Your best bet would be to find a local CPA or enrolled agent to help with your filing and tax penalties you will have to pay.
- Owe Taxes and Have Unfiled Returns (Can’t afford to pay what is owed): In this situation you really need to see out an expert that has experience resolving tax problems and knows all of the various options with the IRS. In this situation it may be in your best interest to talk with a tax resolution company to help you find the best solution.
Also, if you are unable to pay your tax liability in full, it is especially important that you file your taxes ASAP. Not filing and not paying your taxes will quickly increase your total tax bill. The penalties for not paying but filing your taxes is about 10 times less than if you were to not file and not pay.
Back Tax FAQs, Topics & Help
Back Taxes Frequently Asked Questions
Common questions taxpayers have about back taxes and the different problems and situations that arise from owing or not filing taxes.
How to File Back Taxes
If you have not filed your taxes it is important to file them ASAP. This guide will help you through getting your back taxes filed to prevent additional penalties and interest from adding up.
Consequences of Not Filing Taxes
Many people thing that they can get away with not filing their taxes. Here is why the IRS will find out and what the consequences of waiting to file are.
What is the Failure-to-File Penalty?
Understand how to calculate the penalty for not filing your taxes, what the maximum penalty is, and what happens if fraud or negligence is involved.
Do you have a legitimate reason for not filing and not paying your taxes? If you do, there is a possibility that you can get those penalties removed through abatement.
Find Out How Much IRS Taxes You Owe
Determine how much you owe the IRS by using one of these methods.