Have you ever wondered what would happen if you didnt pay your taxes? Some people wonder aloud what would happen if they failed to file or failed to pay their taxes – most people probably dream about not paying them at all! There are a couple of things that you need to know about filing taxes, but it’s also important to know what will happen if you are unable to file – or you forget.
Come hell or high water, you must file your taxes. Whether you do it yourself or you use tax return services, these have to be paid. Life happens but you must file! If you have a year where things go a little wrong, this is what could happen if you don’t file:
- Penalty Fees. When you don’t file your taxes on time, you will get smacked in the face with penalties. Firstly, it’s a 5% fee of the total tax you owe for up to five months, and then there are added fees on top of that if you file too late after the deadline. Penalties include failure to file, failure to pay and a dishonored check. When the bank does not honor the check, you can get fined for that – so you need to ensure that you pay in the appropriate way to avoid any fees like this.
- Interest Charges. Added interest may be owed as well if you are late to pay your taxes. This interest can also be added on top of any penalties that you have to pay, which can considerably ramp up the cost you have to pay in the end.
- IRS Notices. When these letters are pinned to your door or are coming through the mail, you know things are getting harder. You have to consider the fact that the IRS isn’t waiting in the wings to swoop in and destroy all of your hard work, but that they will be awaiting payment and they will give you notice before taking any action with your late taxes.
- Forfeited Refunds. Everyone loves getting the letter from the tax people to tell you that they owe YOU money. It’s a nice little boost to the bank account after a hard year. However, if you don’t pay your taxes, they won’t give you the money they owe you – so, pay those taxes and then get your refund back!
- Liens. Did you know that the IRS can take your house, car, bank accounts – you name it? All they have to do is garnish out your wages and this is on public record. Any background checks will show your failure to pay your taxes and that the IRS is taking from you.
- Attacking Your Credit. You will rely on your credit rating more than you know in life, and when you have unpaid debts – especially taxes – that credit rating takes a hit. You need your credit score to remain impeccable, and when you don’t pay your taxes, it takes a hit.
- Property Seized. Did you know that a tax levy is the taking of your property? If you ignore the demand and the penalty, a tax levy is the next step and it can mean you lose your home. It’s not worth it!
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