What Happens if You File Taxes Late? Here is the Good News and Bad

Just do it already. Reset your view on taxes if you think not filing a return is the best course of action for you. Why do you ask? If you file your taxes late, what will happen?

The reality is, filing taxes late can have serious consequences, and what happens if you file taxes late largely depends on whether or not you owe the IRS money—or you’re even required to file (more on that later).

The IRS has various options available to collect what they’re owed, such as levying wages or seizing property, and in some cases, interest rates can be up to 30%. You’ll want to avoid all this by filing your taxes on time (even early!).

A tax return is an annual federal financial report that assembles and reports tax payments, tax deductions, credits, and income received for money earned during the prior calendar year (or tax year).

Do I Need to File a Return?

Despite the scare tactics employed above (what can I say, I’m a CPA who knows you don’t want to get on Uncle Sam’s bad side), you might not even need to file a tax return to begin with.

What Happens If You Don’t File Taxes?

1. Penalties and Interest You’re going to get hit with penalties and interest. If you didn’t expect that right off the bat, you don’t know the federal government. These disincentives usually are enough to entice most to file a return without a fight.

2. The IRS Files a Substitute Return for You I can’t suggest avoiding this option any more than I already am: DON’T LET THIS HAPPEN. Those tax deductions and credits that you think you’re entitled to claim? It likely won’t go down the way you like.

3. The IRS Will Begin the Collections Process This one is a baddy. The IRS will come after you for money they think you owe them. They’ve got a war chest of ways to extract what you owe: wage garnishment, levy money directly from your bank accounts, or even placing a federal lien against your property.

If you need more time to repay your unpaid tax balance, you can file a request for an extension and then apply for an extension. There are different costs tied to establishing an installment plan. A formula exists that considers your particular circumstances (such as debt, the time frame needed to repay, etc.) and determines the cost.

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