Some people are thinking about skipping their tax return this year, especially with the recent IRS cutbacks. But experts warn that avoiding taxes can lead to big penalties and legal trouble. Even if the IRS is facing changes, taxpayers are still required to file. Let’s break down why filing on time is important and what happens if you don’t.
Why Are People Skipping Tax Returns?
Some taxpayers believe they won’t get caught if they don’t file their tax returns. Others feel overwhelmed by the process, especially if they owe money. There are also “tax protestors” who claim that federal taxes are unconstitutional, but these arguments never hold up in court.
Experts say the IRS has reduced staff due to government spending cuts, but that doesn’t mean people can avoid filing their taxes. In fact, penalties for non-filers are still in place and can be very costly.
IRS Penalties for Not Filing Taxes
1. Failure to File Penalty
If you don’t file your tax return on time, the IRS charges a 5% penalty per month on your unpaid taxes. This can go up to 25% of your total tax bill.
- Example: If you owe $5,000 in taxes and don’t file for five months, your penalty could be as high as $1,250.
2. Failure to Pay Penalty
If you file your return but don’t pay your taxes, the penalty is much smaller—only 0.5% per month. This is why it’s better to at least file your return, even if you can’t pay the full amount right away.
3. Frivolous Tax Return Penalty
Some people file incorrect or incomplete tax returns on purpose to protest against the IRS. If you submit a return without enough information to calculate taxes correctly, the IRS can fine you $5,000 for filing a “frivolous tax return.”
What Should You Do If You Can’t Pay Taxes?
If you owe money but can’t pay right away, you still need to file your return. Here’s what you can do:
- File on time to avoid the big failure-to-file penalty.
- Request an extension to get more time to file.
- Set up a payment plan with the IRS to pay in smaller amounts over time.
Ignoring the IRS will only make the problem worse. The best way to avoid trouble is to stay on top of your tax responsibilities.
Even with IRS cutbacks, skipping your tax return is not a smart move. The penalties for failing to file are much higher than simply owing taxes. If you’re worried about your tax bill, file your return on time and work out a payment plan if needed. The IRS may be changing, but tax laws remain the same, and non-filers can still face serious fines and legal consequences.
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