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If you miss this year’s tax-filing deadline, take heart. You won’t find IRS agents waiting at your door to haul you away to the dungeons. But the consequences of not filing vary greatly, and they depend a lot on whether you’re getting a refund or if you have to pay.
If You’re Getting a Refund
For taxpayers who are due a refund, there’s no penalty for failing to file by April 15. However, you won’t receive your refund until you file. You have three years from the original deadline to file and still receive your refund. If you still don’t file by then, Uncle Sam will simply keep your money.
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If You Owe Taxes
If you owe taxes, however, things can get expensive quickly. If you don’t file your return or an extension by the April 15 deadline, you’ll be charged a late filing penalty of 5% of the taxes owed for each month, or part of a month, that your return is late, up to a maximum of 25%. The IRS also charges a late payment penalty and interest on your unpaid tax starting the date payment is due, even if you filed an extension.
It’s important to note that the late-filing penalty can be 10 times more than the late payment penalty. Even if you can’t pay your tax bill and didn’t file an extension, go ahead and file your return as soon as possible so you can minimize the late-filing penalty.
During this time, you can expect the IRS to send you several reminders to file your taxes. The IRS may file a return for you, but it probably won’t include every deduction you’re eligible to receive, leaving you with an even higher tax bill than before.
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If you continue to ignore your responsibility, the IRS may seize your bank accounts, income or other assets.
If you’ve failed to file past years’ returns, or if you know you won’t meet this year’s deadline, schedule an appointment with a tax professional who can help you straighten out the mess. Don’t try to handle this yourself! An experienced tax pro can help you minimize the damage if you owe and maximize any refunds you may be eligible to receive. We can put you in touch with a tax advisor in your area who has earned Dave’s recommendation for excellent service today!