Why Should I File My Tax Return
as Soon as Possible?
There are two advantages to filing
as soon as possible:
Generally, if a taxpayer is due a
refund for withholding or estimated taxes paid, it must be claimed
within 3 years of the return due date or risk losing the right to it.
The same rule applies to a right to claim a tax credit such as the
Earned Income Credit (EIC).Self-employed persons who do not file a
return will not receive credits toward Social Security retirement or
disability benefits. Failure to file results in not reporting any
self-employment income to the Social Security Administration.Back To
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What If I Owe More Than I
Can Pay?
Even if a taxpayer doesn't have
enough money to pay, returns should be filed to avoid further
penalties for failure to file. The IRS will assist in finding a
solution to the problem.
The IRS has streamlined its
policies to offer alternative account resolutions if a taxpayer
cannot pay in full with the return:
The IRS will help to set up an
installment agreement when the situation warrants. Installment
payments allow taxpayers to pay the tax debt over time.The IRS will
consider whether an offer in compromise is an appropriate solution.
What If I Don't File
Voluntarily?
The IRS is taking enforcement steps
for those who repeatedly choose not to comply with the law. IRS
employees will prepare returns when taxpayers do not file. The
returns prepared by the IRS might not give credit for deductions and
exemptions a taxpayer may be entitled to receive. Bills will be sent
to those taxpayers for the tax due, plus penalties and interest.
People who repeatedly don't comply
with the law are subject to additional enforcement measures.
How
Can I Avoid Owing Money on Next Year's Return?
Many people don't file tax returns
because they don't have enough money to pay the tax they owe. They
find out after completing their return that their withholding or
Estimated Tax payments do not equal their tax liability.To help avoid
this situation, the IRS can advise taxpayers how to ask an employer
to withhold enough tax from their pay. For any income that is not
subject to withholding, the IRS can provide information necessary to
make quarterly payments to cover any amount to be owed. To make
payments electronically.
Changes in financial circumstances
could have an impact on taxes. For example, an increase in income,
divorce, or selling an asset, may require adjustments to withholding
or estimated payments.
By taking these steps, taxpayers will be
better able to meet their tax obligations and avoid tax day
surprises.
Will I Go to Jail?
A long-standing practice of the IRS
has been not to recommend criminal prosecution of individuals for
failure to file tax returns, provided they voluntarily file, or make
arrangements to file, before being notified they are under criminal
investigation. The taxpayer must make an honest effort to file a
correct return and have income from legal sources. A letter from the
IRS concerning taxes is not a notice that a taxpayer is under
criminal investigation.The IRS helps to get people back into the
system as part of its long-term plan to improve voluntary tax
compliance. The IRS wants to get people back into the system, not
prosecute ordinary people who made a mistake. However, flagrant cases
involving criminal violations of tax laws will continue to be
investigated.
