Has it been a while since you filed a tax return? Are you feeling guilty? Scared? Don’t know what to do? Don’t panic! I’m here to help you figure out what steps you need to take.
There are a lot of reasons people don’t file their taxes. They lose the paperwork needed to file. They can’t pay the amount owed. Maybe they just forgot about it. Sometimes illness, family crisis or depression plays a role. The list goes on and on. And believe it or not, there are people who don’t file tax returns even though they’re owed a refund!
If you are a non-filer, don’t procrastinate any longer. You may be hoping the IRS has forgotten about you, but trust me, the IRS doesn’t forget! In truth, the longer you wait, the more costly it will be if you owe money. And if you are due a refund, the statute of limitations on that refund expires three years from the date the return should have been filed. For example, if you didn’t file a return for 2012, you had until April 15, 2016 to file and receive your refund. Don’t risk losing your money.
It can feel especially overwhelming if you haven’t filed in a while. Try not to let it get you too worked up because there is always a solution. Lost paperwork can be reconstructed. If you owe money, it’s better to file and negotiate an installment agreement. This way you’ll stop getting late filing penalties (though there will still be interest until the tax bill is paid). Sometimes, penalties can be reduced, removed, or even both if the circumstances are serious, such as family crisis, illness or other catastrophic situations.
The best piece of advice I can offer you is this: Don’t wait for the IRS to come looking for you. It will work out much better if you are proactive and take action first to get everything resolved. Ignoring the problem won’t make it go away–trust me. The IRS expects everyone to at least fill out the forms and make an effort to pay, whether you’re a day or a month or a year late. Not filing your taxes has repercussions:
- You’ll incur interest charges and late payment penalties.
- The IRS will file a return on your behalf and won’t give you any credits you may be eligible for.
- The IRS can garnish your wages, seize your accounts, and place liens on your assets
- If you’re self-employed, the income you would have claimed will not be relayed to the Social Security Administration, and you won’t get some of the credits that compose your benefits.
- Refinancing your home or trying to get a business loan? The financial institutions that you’re working with will want to see past returns, and your request will probably be denied or at least delayed.
Can’t Pay? There are Options
Don’t let fear keep you from taking action. Yes, it’s not good to not file your tax return, but it’s even worse if you just ignore it all together! There are actions that can be taken to help you establish the best plan to deal with your past-due returns and any penalties you have.
For example, if you fill out an Online Payment Agreement application (www.irs.gov/payments) you may get an extra 60-120 days to fulfill your obligation. The IRS may also allow you to set up an installment agreement.
And just ignoring your tax return can lead to a levy on your financial accounts or wages, or even a federal tax lien. Don’t put yourself at risk when there are lots of solutions to be made!
Planning is Essential
If the reason you didn’t file your tax return is because you can’t pay what is owed, you’re probably not keeping on top of your year-round financial planning.
Do you do any tax planning throughout the year? If estimated taxes are due quarterly, do you pay them? Are you having trouble collecting payments due, or are you experiencing other fiscal difficulties?
Good financial planning throughout the year will save you from any scary surprises come tax time. If you want to know more about paying your quarterly taxes, check out my blog post.
Are you ready to finally deal with those late tax returns?
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