Block on Trump's Asylum Ban Upheld by Supreme Court
Tax Day came and went and you did nothing. Well, you probably did something -- you just didn't file your taxes. You didn't even file for an extension like we told you.
And now you might be wondering whether the IRS will come calling for their money. Can they arrest you for not filing your taxes? Send you to debtor's prison? The good news is you're probably not going to jail, yet. The bad news is your battle with the IRS could get very, very expensive.
How Will They Even Know?
If you're hoping to fly under the IRS's radar, you might want to reconsider; even with a slashed budget, the IRS's computers will likely know that you didn't file. The process is simple: If you got an official paycheck last year, it probably generated a 1099 or W-2 and was reported to the agency by your employer on their tax filings. And the tax men have the technology to know if your tax filing is missing.
While it may take the IRS some time to act on an omitted tax filing, your debt doesn't disappear. Your refund might, though: if you haven't claimed your refund within three years, you lose the right to it for good.
Prison for Procrastinators?
Like we said, the government normally isn't going to put you in cuffs or in a cell for merely failing to file, especially if the IRS happens to owe you a tax refund. (In which case, what are you waiting for??) Even if you owe the IRS, they know you can't make money if you're locked up, and they'd rather have your tax dollars.
If you don't pay your taxes, the IRS will generally send you a bill for the owed amount. Depending on how delinquent you are, this bill could include significant penalties based on how much you owe. Fail to file? That's a 25 percent penalty, by itself. File late? That's another 25 percent. And don't forget the interest on the unpaid tax debt, currently accumulating at 3 percent for every year you're late, which comes on top of the penalties.
So unless you're one of the very few who don't have to file taxes, you'll probably want to file your past due tax return ASAP. And if you're putting off filing because you can't afford the tax hit right now, learn how to pay your taxes in installments in order to avoid unnecessary penalties and interest.