3 Step Solution For Unfiled Tax Years
At the end of each year, many people find themselves still fighting to get their taxes done. It's not uncommon for a person to have an unfiled tax return from one or more years.
This is not a good thing, as it can lead to penalties and interest that you may not want to pay. The unfortunate truth about unfiled tax returns is that it's a significant offense to fail to file your tax returns. Perhaps while there won't be a statewide manhunt for late returns, you could face significant fines and even jail time.
When You Don't File Your Tax Returns, What Happens?
Every year, the IRS expects you to file your tax returns by April 15th. Tax returns aren't the most fascinating thing in the world, but they are necessary. Many people either wait until the last minute to file or never file at all. It might be costly if you do not file your tax return. Here are some of the consequences of failing to file your tax returns:
Penalties - For each month that your taxes are not paid, you will owe the government 5% of the outstanding taxes in penalties. However, the penalty is limited to a maximum of 25%. If you file by April 15th but owe the government and fail to pay the amount by that time, then a smaller penalty will be assessed upon you. For each month that the tax debt remains outstanding, you may be penalized between 0.5% and 1% of the unpaid tax debt. Keep in mind that you must file by the April deadline each year. You may be able to seek a tax-filing extension in specific circumstances.
No Tax Refund - It's possible that you'll lose your tax refund. You have three years to claim your past tax refunds from the IRS. After the third year, if you continue to neglect or fail to file your taxes, you will have effectively forfeited those back-tax refunds. You're essentially squandering free money that could be put to better use.
Delayed Refunds - It's simple as that. When you habitually file late, the government can take a long time to investigate your taxes. Furthermore, the fact that you filed your taxes late implies that you will face penalties. Depending on the fines, this could cause your tax refund to be delayed or even forfeited.
3 Step Solution
Gather The Documents You'll Need To File Your Back Taxes - Request that the IRS provides you with your W-2 and 1099 documents to begin. If you are self-employed, however, you must gather all records demonstrating any sources of income that are not currently on file with the IRS.
Complete And Submit Your Tax Return - Make sure to fill out the tax return form completely and precisely. You can even hire a professional tax preparer to make sure you don't forget anything. If you need more time to finish unfiled tax returns or pay what you owe, contact the IRS to see if you can seek an extension or work out a payment plan. You may be able to avoid further penalties as a result of this.
Keep A Close Eye On Return Processing And Compliance - You must keep track of the return processing by requesting an account transcript to check that the IRS received your returns and that you followed all of the rules.
The IRS requires you to file all unfiled back taxes in order to achieve tax compliance. You may need to go back as far as six years in some circumstances. Every account, however, is unique, and you must maintain open lines of contact with the IRS. This will assist you in ensuring that you have properly complied in order to avoid going to jail.
Unfiled Returns Hinder Eligibility For Relief Programs
Of course, there are certain extra requirements in order to be eligible for tax relief programs such as the IRS Fresh Start program. To begin, you must be current on all of your tax returns, including those from previous years. If you have any unfiled returns, you cannot apply for the IRS Fresh Start program, and you must file timely taxes for any subsequent years.
IRS Fresh Start Program
There are many programs that are offered in order to solve your tax-related issues in some sort of way. But there is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program; The IRS Fresh Start Program.
This program is designed to relieve not only the IRS but also your back taxes. It does this by making sure you are filing accurately and gives up-front payment options solutions for those who can't afford their tax debt payments. This relief program utilizes four of the major tax resolution strategies into one consolidated program!
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