Filing Taxes Late – Inviting Penalties Through Delaying Taxes
Not paying taxes on time is a federal offence in the United States. There may be genuine reasons for nonpayment, however avoiding the taxes altogether may invite a host of penalties. The IRS encourages the tax payers to pay the taxes in full.
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Filing Taxes Late - Loopholes to Avoid
While filing taxes late, the procedure of filing remains the same. However, it is important to intimate the concerned department to ask for an automatic extension. Filing taxes late may invite a penalty of almost 25% and then not only you will have to file the taxes, but also pay the fine. The IRS also has ways to find out if you have at all filed your taxes or not. You will need the proper forms or you can also visit the IRS local office if you are filing taxes late
. It is important to gather your benefit information and you will need a W2 form or you may also need a 1099 form and then go ahead with the filing. You can also visit the official website to get more detailed information. If you are late electronic filing is not permitted.
Income Tax Late - Pay Full and Save Money
The first and foremost loss of not paying taxes on time is you lose your right to claim credits, exemptions and deductions, which reduce your annual taxes. Secondly, filing income tax late
can lead to 25% increase in your payment liability along with penalty and interest charges. Your tax refunds and social security benefits may also be in trouble if you pay income tax late i.e. after three years.There are also online resources that can help you file it. You will be able to avoid the common mistakes and there are interactive chat sites from where you can take help from. They are extremely convenient and will guide you through all your questions. They also come with glossary that will help you with the difficult legal terms along with all the references you may need.
Late Tax Filing - Lose Credit Ratings
The biggest disadvantage of late tax filing is the evader may find himself at the wrong end of the law. The IRS may go to the extent of blocking the bank accounts, deduct the wages and claim the other income sources and in some cases can take over the defaulters’ property as well. In extreme cases the IRS also issues "Notice of Federal Tax Lien" which may have harmful effect on the credit ratings. As the credit rating agencies are immediately notified about the tax lien matters, the tax payer should resolve the tax debt as soon as possible.Paying tax on time is a responsibility, if it is delayed try and reach an early compromise by seeking time to pay or ask for an installment agreement but do not avoid paying taxes completely.Photo Source : flickr.com/davedugdale/