Doing your taxes and filing them can be a daunting process. It can be time-consuming and annoying if you don’t know what you are doing. You’d think not doing your taxes could save you a lot of money, time, and stress. But in reality it can get you into a lot of trouble. This article will tell you about what happens when you don’t do your taxes.
What Happens If I Don’t File My Taxes?
Wondering what would happen if you fail to file or pay your taxes? Read on and find out!
Penalties and Fines for Failures to Charge
When you fail to file or pay your taxes, you’ll receive penalties and interest on the amount you owe. The IRS adds an interest of .5% to the tax owed for every month the tax remains unpaid for. This keeps adding on until the tax is paid in full or until you reach the maximum penalty point of 25%.
This interest rate increases to 1% after the IRS issues a penalty notice or a notice of a levy. Also, you’ll recieve a late filing penalty of 5% for up to 5 months of nonpayment. If your payment is over 60 days overdue, you must pay a minimum Failure to File Penalty, which is 100% of the tax you owe or $435 (whichever may be less).
Lien
A lien is a notice that the IRS can file to indicate its claim to a current asset or property of yours, like your car, home, or bank accounts for failing to pay your taxes. They can even claim future property or assets like your future wages and retirement accounts to balance out the money you owe them. Liens can adversely affect a person’s credit score significantly.
If you want to release or remove the lien, you will have to fully pay off the taxes you owe and all the interests and penalties that accrue. You will also have to pay off the expenses that the IRS would have accrued for filing and releasing the lien.
Levy
The IRS can seize or levy your property in order to pay off your debts. This could mean seizing your wages, or they could seize your assets like your houses or cars. They can also withdraw the money owed directly from your bank account. Levys are issued after a notice so that you may pay off what you owe or create a payment plan before they start seizing your property. When the IRS seizes an asset, they sell the asset and use the money towards paying your tax liabilities.
Both levies and leans can be appealed or released by paying the taxes you owe or by creating an installment agreement. It can also be released and appealed if the levy or lean was issued incorrectly or the collection period ended.
