If you have in case missed all the clues related to Tax day and now you are wondering what should be done, then this article will be of great help for you. No, you should not be panicking since the world does not end if you do not file your taxes on time. However, there will definitely be some financial consequences involved as per your circumstances. Read on, to find out what really happens if you do not file your taxes on time.
Failure To File:
If you fail to file your tax return on time, the IRS can and will penalize you for a late filing fee. However, if you don’t file within 60 days of the April due date, the minimum penalty is $210 or 100% of your unpaid tax, whichever is lesser. There are certain circumstances under which the IRS will waive late filing penalties, yes you read it right. Some disaster victims, military service members, or anyone who has some problems going on due to serious issues have more time to file and pay.
Failure To Pay:
Now, you must be wondering what exactly happens if you fail to pay on time, well Penalties for failing to pay your taxes on time are actually lower than for filing late. And For each month past the payment date, you will be assessed 0.5% of your total tax bill as a penalty. This fee also maxes out at 25% of your tax bill. You can reduce the penalty and interest by paying as much as possible on time. The less you owe, the less you will have to pay extra. If you fail to file as well as fail to pay on time, the failure-to-pay penalty is waived and you only pay for failing to file.
What’s The Worst That Can Happen?
If you don’t file your taxes or file for an extension, you will accrue penalties that can be up to 25% of the taxes you owe. If you owe $5,000, your penalty will be $1,250. If you don’t file for more than 60 days, the penalty could be double your tax bill, yes! The penalty compounds monthly until you file. If you completely neglect to pay your taxes and ignore the IRS, the government will then start garnishing your wages, placing liens on your property, and start talking about jail time, yes you read it right and this is exactly what really happens if you do not pay your taxes on time. The best thing you can do is to file and pay as soon as possible to avoid building up penalties and interest. Then plan better for next Tax Day by putting a process in place right now to keep up with all your documentation. Check to make sure your withholdings are correct and that you are paying the appropriate amount of estimated taxes.
It is highly advised to hire yourself a tax debt professional, who can help you in keeping an eye over the calendar so the next time you do not end up missing out on the tax day deadline.
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