The Consequences with Unfiled tax Returns
Not filing your tax return yearly is a grave offense in the eyes of the IRS. With this, they themselves will file them for you. This is made possible by Substitute for Return. If they can file it for you, then why bother filing it yourself?
First of all, you need to file your tax return personally for when it is the IRS who does, the proper tax deduction is not included along with the credit that you can qualify for. IRS viewed unfiled tax returns as one of the most serious offenses that a taxpayer can commit. Therefore, repeatedly doing this will be deemed as an evasion of the tax in your part. And with that, this can lead to the following consequences:
- First off, there would be penalties once you failed to file your tax on the given dates. In the failure-to-file penalty, you will have to pay 5% per month for those tax balance you owed. Furthermore, there is also the failure to pay penalty and other penalties you may face.
Carrying out your loss will be no longer possible.
When you have an investment loss, you can offset up to $3000 in your income. When it is over $3000, the pit can be carried forward. But with unfiled returns, that loss will not be known to the IRS which clearly means that there will be no carrying forward of losses for you.
Consequences with the Substitute Return
Since the deduction that the IRS will not include when they filed your tax return, you may owe more that you thought you do. This can also lead to you owing IRS.
You can no longer qualify for bankruptcy
In the Bankruptcy chapter 7 0r 13, it is prohibited that you have an unfiled tax return. If there are unfiled returns in your record, applying for bankruptcy will not be possible.
If you have any refund to get from the IRS, failure to filing your tax return will cause for you not to get that refund you expected. If after 3 years, you did not file the federal tax return, there will be no chance of redeeming that refund ever again.
You may lose tax credits
When you have tax credits that you did not claim on the time frame given, you can no longer claim it.
The beginning of collection efforts
Unfiled returns can lead to collection mechanisms like the tax levy and tax lien.
- Being sent to jail due to the failure of filing the tax is quite rare, but this is still a possibility that you should consider for there are laws for it.
It is in your best interest if you can find time to file your taxes. With all these negative consequences you might face, going through the trouble of filing is a lot better that any of these things. But when you cannot do it and unfiled returns come back at you, you know where to go. Just call Green Tree Tax and you will not have to worry on any of it.