If the tax deadline for last year passed you by you might think it's too late to file your return. The truth is you can file a tax return at any time even if the deadline has come and gone. However, the sooner you submit your return the better off you'll be. Here are five reasons to file delinquent tax returns to the IRS.1. Neglecting to File a Return is Illegal.
First of all, not completing your federal income tax return is technically a crime. Tax law requires that all taxpayers who have earned enough money to report their income to the IRS do so by the filing deadline each year. The IRS has placed several people in jail simply for failing to complete their income taxes on time.
2. The IRS Assesses a 25 Percent Penalty for Late Filing.
Another reason to file a delinquent return is that it helps you lessen the impact of late filing penalties. The IRS charges a 25 percent penalty immediately when your return is not filed by the tax deadline. This penalty even applies to taxpayers who receive tax extensions. All the extension does is give the taxpayer more time to complete their forms. The tax they owe is still due by the deadline. It's best for those who apply for extensions to send in a payment based on an estimate of their tax liability before the filing deadline for that year.
3. You May Be Subject to More Penalties.
On top of late filing penalties you will also accrue failure to pay penalties on the amount of tax you owe. This penalty is compounded monthly so your tax bill will continue to grow until you settle your account. In addition to the penalties, your account will also generate interest which you'll be responsible for paying.
4. The IRS May Prepare a Return for You.
While this may sound like less work for you it's really not. If the IRS prepares your return the agency will limit your deductions and exemptions to the bare minimum which will cause you to pay more in income tax.
5. You Won't Qualify for Tax Relief Until You File for Past Years.
Should you need to take advantage of tax relief provisions such as an offer in compromise, you won't even qualify to apply for them if you have unfiled tax returns that have not been filed. Clearing up your outstanding tax record will make it easier for you to request tax relief.
In short, it's always in your best interest to file delinquent tax returns to the IRS. If you need assistance preparing your forms, consider hiring a tax resolution specialist to assist you.
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