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What Happens If You Haven’t Filed Your Taxes

by John on November 17th, 2014

If you haven’t filed your personal taxes yet, please give us a call right away at (770) 419-3399. If you would get a refund from the IRS, you have by 3 years from the due date to file or they will keep your refund. For example, for tax year 2013, the due date was April 15th, 2014. So to claim your refund, you would have to file by April 15th, 2016, or with an extension, by Oct 15th, 2016. If you would owe money to the IRS, the penalty is 5% per month on the tax owed for the first 5 months (4.5% for filing late and .5% for paying late). After 5 months, the filing late penalty stops, but the paying late penalty continues. The total paying late penalties could reach as much as 25% of the taxes owed. If you owe for several years, it’s better to pay the later years first because it’s more likely that the penalties for the earlier years are maxed out even though the money owed is still accruing interest. Paying off later years will stop the penalties that may still be accruing.

The IRS will send you several letters asking you to file and pay. If you still don’t file and pay they could levy your bank account or garnish your wages unless you can prove you are in hardship. To prove hardship, you would have to send them documentation showing that paying what they ask you to pay would keep you from paying your rent, buying food, buying necessary medicine, or otherwise impede your ability to live.

If you file an extension but aren’t able to pay in full right away, you will still incur the 0.5% penalty for paying late. An extension only gives you more time to file, not more time to pay. It only prevents the 4.5% penalty for filing late.

If you file your taxes but aren’t able to pay in full right away, you will still incur the 0.5% penalty for paying late unless you call the IRS. You can call the IRS and get a 4 month grace period for paying through their automated system as long as you are in good standing with them. Or you can call them and setup an installment plan where you pay an agreed upon amount per month. This will reduce your late payment penalty to 0.25% per month.

From → IRS Trouble

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