To sign up for our daily email newsletter, CLICK HERE
We’ve all experienced that moment of blind panic upon realizing that tax season is suddenly upon us and it is time to file. This is bad enough when you realize that you do not have much time to file your taxes. It’s even worse when you realize it’s too late and the deadline has already passed.
If you forgot to file taxes last year and have received an unexpected reminder, there is no need to panic. The most important thing is to act fast to make sure you do not end up being forced to pay substantial financial or legal penalties. If you want to know what happens if you don’t file taxes and what to do about it, read this handy explainer to find out.
1. What Happens if You Forgot to File Taxes?
There could be a lot going through your mind right now and you are probably thinking “can you go to jail for not filing taxes?”. In short, the answer is “yes”. However, this is a punishment that is hardly ever applied in cases where someone has simply forgotten to file and legal proceedings of this nature are always a final resort.
More likely is that you will be fined, a lot. The IRS collects billions of dollars in penalty fees and fines every year from tardy taxpayers, many of whom forgot to file. If you forgot to file, you will also face interest on any outstanding balance for every single day past the deadline that you forget to file. You can also kiss your refund goodbye until you have filed.
In addition, any ommissions on your return, for example, if you forgot to file unemployment on taxes, will also result in additional penalties and potential liens.
2. What Should I Do?
Now that you know what happens if you forgot to file taxes, it’s time to know what to do about it. Obviously, the first thing to do is file your taxes as fast as possible. This will reduce the amount of interest you are charged and will strengthen your case if you decide to go to appeals.
Make sure you have all of your documentation, especially payslips and invoices. Fortunately, if you do not have the documents to hand, you can generate them yourself at home. Simply use an online paystub maker to instantly generate IRS-standard pay documents in an instant.
3. Is There An Appeal Process?
If you have a good reason for forgetting to file your taxes, you can always appeal to the IRS to have your penalties removed or reduced. You can appeal via the IRS website in just a few minutes. The reasons generally accepted for an appeal are:
- Serious illness or incapacitation of yourself
- Death of an immediate family member
- A natural disaster affecting your place of residence
- Inability to obtain tax records for reasons out of your control
- Any evidence that you genuinely tried to file in time but could not do so
Get Your Finances in Order This Year
Now that you know what happens when you forgot to file taxes, it’s time to make sure it doesn’t happen again. If you’re ready to get your finances in perfect order for 2022, we’re here for you. Our dedicated Business and Finance guides will help keep you in the black.