Taxes can be complicated at times. Perhaps you have questions about the deductions you can take, or maybe you are concerned about the amount you owe. Whatever the case, you should always file your taxes. If the IRS discovers that you did not file your taxes, they can take a number of different actions against you – and none of them are good. The potential consequences for not filing your tax return include:
Substitute for Return Once the IRS notices your taxes are not filed, they will complete your tax return for you. At first, this might not seem like a bad idea – unfortunately, there is a catch. When the Substitute for Return is issued, additional exemptions or expenses you are rightfully entitled to may be excluded. Additionally, your real tax liability might be overstated, so you could be losing even more money than had you filed your return in the first place.
Penalties and Interest Failing to file taxes on time can also result in a number of penalties and incurred interest. The failure-to-file penalty, for example, results in a monthly late fee equal to 5% of your total balance due. After five months, this percentage will increase to 25%. You may also be charged interest based on the total of your past-due tax balance. The current interest rate is 3%.
Jail Time Although most people who do not file a tax return do not go to jail, the IRS can suggest criminal prosecution for individuals who fail to file taxes. Notorious gangster Al Capone and actor Wesley Snipes are just a few of the high-profile celebrities who served jail time for not filing a tax return, but it can happen to anyone, so be sure to file your taxes truthfully and on-time to avoid a potential criminal prosecution.
The best way to avoid trouble with the IRS is to have your taxes filed at The San Diego Tax Pro. We help individuals and businesses in the San Diego area prepare and file taxes. Visit our website or call (888) 690-9245 to learn more about our tax preparation services.
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