What Happens if You File Taxes Late? Here is the Good News and Bad

Just do it already. Reset your view on taxes if you think not filing a return is the best course of action for you. Why do you ask? If you file your taxes late, what will happen?

What is a Tax Return?

A tax return is an annual federal financial report that assembles and reports tax payments, tax deductions, credits, and income received for money earned during the prior calendar year (or tax year).

Do I Need to File a Return?

Minors don’t need to file tax returns. However, their parents or guardians may if they qualify for the Kiddie Tax, meaning they owe taxes on investment income (meaning income from investment accounts for kids) or earned income (which they can contribute to custodial Roth IRAs for kids and reap decades of compounding returns).

What Happens If You Don’t File Taxes?

1. Penalties and Interest

First things first. You’re going to get hit with penalties and interest. If you didn’t expect that right off the bat, you don’t know the federal government. These disincentives usually are enough to entice most to file a return without a fight.

What Happens If You Don’t File Taxes?

2. The IRS Files a Substitute Return for You

A substitute return won’t include all the details you’d like shown about your tax picture, costing you money for not claiming applicable deductions, credits, or other tax items which benefit your bottom line.

What Happens If You Don’t File Taxes?

3. The IRS Will Begin the Collections Process

They’ve got a war chest of ways to extract what you owe: wage garnishment, levy money directly from your bank accounts, or even placing a federal lien against your property.

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