Did you skip filing taxes? You’re not alone. Over 14 million Americans owed back taxes (plus penalties and interest) in 2018.
Whatever your reason for opting out of a tax return, you might think the IRS won’t notice because you’re a small fish in a big pond. But the agency does know when you fail to file. And if you have unfiled tax returns or you owe back taxes, it could not only cost you serious money but also get in the way of tax relief in the future. Remember: you don’t get a refund if you don’t file!
If you haven’t filed taxes in a while and you’re starting to see consequences, the first thing you need to do is bring your paperwork up to date. Here’s how to get it done.
1. Find Your Income Documents from the Missing Year
Before you can do anything, you need proof of income from the missing tax year. If you’re employed, that means getting your old W-2. Are you self-employed? You need to hunt down your 1099s or invoices.
In today’s digital world, finding these documents is much easier than it was in the past. All you need to do is go back to your employer or clients and ask them for the relevant copies, which they should have in their payroll management systems. If that’s not an option, you can ask for a copy from the IRS using Form 4506-T.
2. Download the Tax Forms for the Relevant Year
You can’t put your income information into a tax form that isn’t relevant. You must use the form dated for the year in which you intend to file.
If you’re not sure what form to use, you can contact the IRS or work with a tax solution provider like Silvertaxgroup.com.
3. Prepare to Pay Penalties and Fees
The problem with failing to file taxes is that you will eventually be forced to catch up. And when you do, you can face penalties, fees, and interest as a result of your failure to file.
Failure to file, failure to pay, and failure to pay property estimated tax are each separate fees.
However, you are unlikely to deal with too many penalties if you don’t owe tax or if you are due a refund. The IRS assesses these fees to people who owe tax, which may or may not apply to you. If you do face penalties, you can ask for penalty relief from the IRS.
Unfiled Tax Returns Work Against You, So File Soon!
Millions of Americans fail to file their taxes each year. Sometimes, it’s a discrepancy, or they don’t realize they need to file. In other cases, they skip tax season on purpose.
Whether or not you owe taxes, unfiled returns can get in the way of your finances. Not only can they stop you from obtaining student loan relief, but the IRS can garnish your paycheck and withhold future tax returns if you don’t file.
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