Mark Glendon

What Happens if I Don't File My Taxes?

They say there are only two things you can't escape in life: Death and taxes! But have you ever wondered what would happen if you don't file your taxes? These days, learning how to file taxes is easier than ever. There are many professionals available to make the process easy, and the IRS gives you ample time to get all your paperwork in.

So, what happens if you ignore those deadlines and don't fulfill your tax obligations with the IRS?

Failure to File Penalties

You will receive a penalty if you don't file your taxes by Tax Day (April 15th). There are two types of penalties involved.

The first is the Failure to file penalty, and the IRS charges this fee when you don't file your taxes by the due date. The second is the Failure to pay penalty. Because you didn't file your taxes, you likely didn't pay the taxes owed either. As the name implies, it's an extra charge that applies when you don't pay the total amount of taxes owed.

How much is the Failure to file penalty?

It's 5 percent of the unpaid taxes for each month (or part of the month) that your tax return is late. The IRS will charge both Failure to File and Failure to pay penalties. However, the Failure to file penalty is reduced by the Failure to pay penalty, resulting in a 5 percent penalty each month you're late.

The Failure to file penalty does max out. It won't exceed 25 percent of your unpaid taxes. Therefore, the penalty maxes out just five months after the due date. But if you owe taxes, penalties will still accrue.

The Failure to pay penalty goes beyond the five-month window, amounting to 0.5 percent of your unpaid taxes. It also maxes out at 25 percent, but you'll continue getting penalties for much longer until you fulfill your tax duties.

There are ways to manage payment. Once you learn how to file taxes with a professional, you can request payment plans to reduce penalties and get back on track.

Author Resource:-

Mark writes often about tax and estate planning. His articles may include topics like tax planning, estate planning, business accounting or any other tax service to help the people in needs. You can find his thoughts at tax advisor blog.