Your Financial and Tax Health: Not Filing is Not Smart
If you’re like many of us, the idea of paying taxes isn’t particularly appealing. Some people just don’t want to be bothered with it, while others believe the whole idea of an income tax is unconstitutional to begin with. The legality of the income tax was established with the ratification of the 16th Amendment in 1913. Whether you need to file is another matter. In some cases you might not. This interactive tool from the IRS can give you an idea.
If you do expect to owe a balance, know that a tax liability only gets worse with time. To begin with, the IRS can assess a failure to file penalty of 5 percent as well as add a levy of another 5 percent of any unpaid balance for every month or part of a month that the return remains unfiled and unpaid. It can add up pretty quickly!
The IRS isn’t going to kick in your door on April 16th if you don’t pay your taxes. Long before that you will receive a series of increasingly ominous letters. Ignoring these letters is where taxpayers get into trouble. You’ve probably heard about the IRS placing a lien against taxpayer’s future earnings or even seizing their property or bank accounts. These extreme measures are usually the result of putting off your tax obligations.
Remember that the IRS will never call you, so if you do receive a threatening phone call from someone claiming to be from the IRS, it’s a scam. If you receive a letter from the IRS, make sure to respond to it promptly. If you’re unsure as to what steps to take, consult a qualified tax professional. Take care of any liabilities as soon as you can. No, it won’t make your tax bill any easier to swallow, but it will save you a lot of trouble in the long run.