By Evan Vitale
With tax day just around the corner, sometimes a few questions might come to mind if we’re surprised and find out that we owe taxes instead of receiving a refund. Here are some questions and answers to paying taxes and facing some unexpected financial responsibility.
What happens if I can’t pay my taxes this year?
You still want to sign and send in your tax return and pay as much as you can. The Internal Revenue Service (IRS) has payment options available, depending on how much you owe and your current financial situation. Each option has different requirements and some have fees.
What happens if I file late?
If you file your tax return late – with or without payment – the IRS will likely charge you a penalty. In addition, if you owe taxes, the IRS charges daily interest on unpaid tax bills. Therefore, the longer you wait to file or begin a payment plan, the more interest you will owe.
What happens if I don’t file my taxes?
This isn’t a good idea. The IRS will likely send you reminders to file. If ignored, the IRS may then file a substitute return on your behalf. Granted, while this may sound like a good idea in having the IRS file for you, you’ll probably not receive entitled deductions or credits.
If you are a chronic non-filer, you will be subject to additional penalties and, in some cases, criminal prosecution. Delinquent taxpayers who owe more than $25,000 will eventually receive a personal visit from an IRS agent to collect payment.
Remember:
- Complete and file your federal, state and local (if required) tax returns on time to avoid penalties.
- Even if you can’t afford to pay your tax obligations, it is better to file without payment than it is to wait until a later date. If you can, make some time of payment with your returns.
- Never avoid or ignore filing your tax returns on time.
