Most people voluntarily file their tax returns and pay their taxes —they want to pay their fair share and get a refund, claim a credit or avoid breaking the law.
Why do some people fail to file their tax return?
IRS research shows that sometimes people don’t file due to:
• a change in their filing status resulting from the death of a spouse, divorce or other life-changing event;
• emotional or financial reasons; or
• procrastination.
What are the consequences of not filing?
Unfortunately, failing to file a return can create additional problems, including the possibility of costing you money. Here are some things to consider:
• Failure to file penalty – If you owe taxes, a delay in filing may result in penalty and interest charges that could increase your tax bill. The longer you delay, the larger these charges grow.
• Losing your refund –There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether. In cases where a return is not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund.
• EITC – If you are entitled to the Earned Income Tax Credit, you must file your return to claim the credit even if you are not otherwise required to file. The return must be filed within three years of the due date in order to receive the credit.
What should you do?
Regardless of your reason for not filing, file your tax return as soon as possible. You can contact a tax professional or the IRS for help with filing delinquent returns.
If you are unable to fully pay any tax due on the late returns, do not let this prevent you from filing — payment options may be available. For more details, ask your tax professional or an IRS representative.
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