Let’s be honest—filing your taxes is a real pain in the… pocketbook. There are countless reasons that you might have failed to file your tax return.
One, life got in the way and you just lost track of time. Two, you didn’t have the money to pay the filing fee. Three, you were worried about owing money in taxes so you intentionally put off filing. Four, you couldn’t find all of the documents you needed, so you are waiting until you have everything you need.
Penalties When You Don’t File Your Tax Return
Whatever the reason is that you haven’t filed your tax return, or multiple returns, you need to know that there are penalties associated with failing to file. A lot of people are unaware of these penalties, and it’s important for you to know what you’re risking. Below, read through some information on the consequences of not filing tax returns.
Some of the main penalties you will be hit with for not filing your tax return are financial penalties. These fees will be added to your tax bill, and they can be pretty heavy penalties.
You will automatically be hit with a penalty equal to 5 percent of your total tax bill for not reporting unpaid taxes. You will also be hit with a late filing penalty of a little over $200.00 (this penalty fee changes every year or so).
The Government Could File Your Return Instead
If you don’t file your returns willingly and on your own, the government can actually file a return for you. They will use whatever income has been reported to them, but they won’t take out any of the credits or deductions you would normally be entitled to, such as dependents.
This can greatly increase your tax bill and could make your situation much more difficult to get under control.
Jail and Fines
It’s possible to be put in jail or prison for not filing your tax returns. You can’t be sent to jail for not paying your taxes, but for not filing them, you can. This is an important distinction. As long as you file your tax return, you can’t go to jail.
Connect with a Tax Attorney for Help Getting Your Returns Filed
You can clearly see that not filing your tax return is a big deal. The government does not take this situation lightly, as filing tax returns is not optional. Even if you don’t have the money to pay your tax debt, you should still file your tax return. This can at least help you avoid some of these more serious penalties. In addition, the failure-to-pay penalties are less than the failure-to-file penalties.