What happens if you don't file your taxes?
Today, we're diving into what happens if you forget to file your taxes. Spoiler alert: It's not like skipping leg day—you can’t just double down next time!
1. Penalties and Interest Start Adding Up
When you miss your filing deadline, the IRS doesn’t forget. For each month you’re late, you’re hit with a failure-to-file penalty, usually 5% of the taxes you owe, up to a max of 25%. You’ll also rack up interest on unpaid taxes. It's like compound interest but in reverse—your balance grows, but it’s the kind you don’t want!
2. No Refund for You!
Are you due a refund? If you don’t file within three years, the IRS keeps it. That’s your money, but only if you ask for it in time. Filing late could mean leaving free cash on the table. No one wants that.
3. Lose Eligibility for Payment Plans
If you owe and can’t pay, filing is still a must. The IRS offers payment plans, but they won't even consider it until you file. Once you're back in the system, you might be eligible for an installment agreement to spread out your payments.
4. IRS Will File for You... But Not in a Good Way
Think the IRS will just forget? Nope. They might file a substitute return for you, based only on the info they have (like W-2s or 1099s). It’s often not in your favor. Deductions, exemptions, or credits? Yeah, they won’t be as generous as you would be. Then, you’ll owe more.
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5. Wage Garnishments and Asset Seizure
If you keep ignoring your taxes, the IRS can start garnishing your wages or placing levies on your bank account. Yep, they can even seize your assets, like your car or home. The IRS has some serious collection powers, and they’re not shy about using them.
6. Criminal Charges (Yikes!)
Okay, this is rare, but if you outright refuse to file, you could face criminal charges. Not filing for one year is a mistake. Not filing for multiple years looks like intent. The worst-case scenario? Jail time and a hefty fine.
So don’t dodge the taxman—it’s worse than dodging responsibilities at the gym!
Call to Action:
If you're late or unsure about your taxes, don't wait. Reach out to a professional (like me!) and get your financial health back in order. After all, a stitch in time saves nine—and potentially a whole lot of penalties!