Each year, thousands of people and businesses across the country miss the deadline for paying or filing taxes. If you were one of these people, you’re not alone, but there are some consequences you should be aware of. The IRS does what it can to encourage taxpayers to willingly honor their obligations to file taxes on time. However, when these efforts fail, there are penalties.
While each situation is unique, here we list 6 reasons why it’s better to do your best to file your taxes on time:
Avoid Penalties and Fees
When the IRS really wants to get the point across, they hit us where it hurts the most…our wallets. Those who file their taxes late may end up having to pay additional fees including penalty and late fees.
Violation of the Law
Though it is fairly rare, the IRS does have the legal rights to prosecute those who fail to pay or file taxes. It is not the policy of the IRS to prosecute ordinary people, but there are instances in extreme cases when prosecution does take place.
Inability to Qualify for Government Programs
Are you planning on returning to school or do you have kids that will be attending college in the future? Many people depend on government sponsored student aid programs to help pay for school. When taxes are incomplete, you may be ineligible to qualify for these types of programs.
In many cases, your tax return statement is used to show your earning and income levels when you are looking to qualify for a loan, mortgage or to establish a line of credit. When you fail to file your taxes on time, you are unable to provide recent information to these types of creditors.
Collect What is Owed
You may be in a situation where you qualify for a tax return, either as an individual or business. If you don’t do your taxes on time, you prolong your ability to collect what’s coming to you.
Ignoring the Issue Will Not Make it Go Away
There a number of reasons why people fail to do their taxes on time, but some convince themselves that if they wait long enough, the IRS will simply let it go. The truth is, the IRS is meticulous when it comes to record keeping and will find a way to eventually collect what is due.
You can avoid many of these stresses and situations by taking action now. Fortunately, there are steps you can take to request extensions and special exceptions, but it requires communication. If you’re not sure what step to take next, call Hacker Accounting and let us help you. The sooner you address overdue taxes, the better the outcome.