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What Happens When You Don’t File Your Tax Returns?

Haven’t submitted your tax returns and are wondering exactly what the IRS can and will do to you. You’re not alone. Fifteen Million People each year that have earned money, fail to file their Federal and State tax returns. Now in the majority of these cases the specific tax payers do not owe anything and do not need to file. This depends upon your earnings, your filing status and your age.

There are 2 categories for tax payers.

If you are a business owner or self utilized and have made over $400 in the tax year or in the past, you have to submit an income tax return.
If you are a W-2 worker and have taxes gotten throughout the year it is a different story. There are minimum income thresholds and these modification virtually every year. You are going to have to seek to see just precisely what the minimum earnings filing requirements are for your age and exactly what your filing status is for that year. You can find this info in the yearly 1040 directions that are provided by the IRS.

State Taxes are a bit different and you will have to discover your State’s local earnings tax page for the revenue requirements for your state.

The problem comes for taxpayers that by not submitting a Federal and State tax return, you are then going to be subject to more collection actions by the IRS. My advice is this. Even if you can not manage to pay your tax financial obligation costs you need to file your returns to remain in compliance with the IRS. Pay exactly what you can. Even if you do not owe anything in taxes for that year their can be dreadful repercussions for not filing. Some of those effects are:

Penalties – By not submitting a Federal Tax return by the date (April 15th or the extension date typically October 15th) you are going to face failure to file penalty of 5 % a month on the amount of taxes your owe. This penalty can not go beyond 25 % of the balance of taxes owed. This 5 % penalty monthly can be decreased by the failure to pay penalty when both penalties take place in the same month. If your income tax return is submitted more than 60 days after the due date, the minimum penalty is $135 or 100 % of the overdue tax.

Can I get a Refund If I Have Not Filed MY Tax Returns?

No Refund For You – The IRS is never going to pay you a refund if you owe them cash. After three years of not filing your returns it is never ever going to occur.
Losses Carried Forward – If you do not submit your returns the IRS is not going to understand about any losses you may have incurred. Normally you can offset your earnings by as much as $3000 and this quantity can be brought forward. NOT if you don’t file. Gone
Alternative to Return – More commonly called a SFR. If you don’t file the IRS understands how much you made from your W-2’s and 1099 types. and they file these alternative to returns. These are NEVER in your favor due to the fact that they do not provide you any reductions you might be qualified for. They figure that if you desired the reductions you would have submitted your returns. This is going to cause more cash owed to the IRS so rather of you being possibly owed a refund you now owe the IRS rather.

No Possibility of Bankruptcy – You can not submit a bankruptcy in the courts if you have unfiled tax returns. All your returns will have to be applied for at least 2 years prior to you can submit for a Chapter 7 and 4 years prior to submitting a Chapter 13.
Incarceration – It is really rare for you to go to jail for not submitting a tax return, but it is a possibility. In reality under Federal law, you can put in jail as much as a year and be released a $25k fine for each year you do not submit a tax return. In some cases, the IRS might take a look at a non-filing as an attempt to avert taxes which will carry much stiffer fines and prison time. With concerns to State taxes, each state is various however lots of states do release fines.
Collection Efforts Could Be Begin – Once you cannot submit your tax returns and you are evaluated a tax quantity owed then the IRS can begin collection attempts. These consist of Tax Liens, Tax Levy’s versus your incomes called Wage Garnishment of levy’s against your bank accounts.

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The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters, and electronic mail. Contacting us does not create an attorney-client relationship.

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