The law requires that you file the return every year you have a filing requirement. The government can impose civil and even criminal penalties on you for not filing your return. There is a 10-year statute of limitations for unpaid taxes, which means that, in most cases, the IRS cannot request taxes due that go back more than a decade. There are some exceptions, but in most cases, the agency will have to abandon its fundraising efforts.
If you're expecting to receive a refund, the good news is that the only consequence of submitting your return after the deadline is that you'll receive the refund late. While you should apply as soon as possible, you can technically request your refund up to three years after the deadline. Although we don't recommend waiting that long. The IRS receives millions of tax returns at the last minute, so you might be wondering if they'll notice that yours is one day late.
Even if you can't pay your full tax bill right now, you should file your overdue returns right away. If you don't file your return within three years after the return's due date, the IRS will keep your refund money forever. An employee simply has to enter the details of their W2 wage return on their tax return, but a self-employed person must enter detailed information about their company's income and expenses. It's important to note that one month doesn't mean 30 days for the IRS to file your return, even one day late means you'll still be fined the full 5 percent penalty.
The most common reason people need to file a return is when they earn more than the standard deduction, which is also known as the income reporting threshold. You may receive notifications from the IRS about your tax liability in the mail, and the penalties and interest will continue to add to your bill. After that, the IRS sends your account for collection and your assets, income, or credit score could be at risk. The IRS will continue to impose these penalties, along with interest, every month your return is overdue and your tax bill hasn't been paid.
If your income is equal to or greater than the minimum income requirement, you'll need to report it even if you don't think you'll owe anything or get a refund. And, during all this time, interest and penalties accumulate, meaning that the IRS can keep more of your money. If you're not going to meet the tax filing deadline, help yourself avoid the penalty for not reporting them by getting an extension to file your tax return. If you have years of unfiled returns, you'll need to find out the income reporting threshold for the corresponding tax year to determine if you had any filing requirements that year.
If you are due a refund in any subsequent tax year while you're on the plan, the IRS can subtract those payments from what you owe. If you haven't done any of those things, the IRS has unlimited time to continue trying to charge you.