Many taxpayers who have not filed their tax returns have several questions on unfiled returns. While some want to know about the statute of limitations on unfiled returns, there are others who are not sure of what steps they can take to avoid the penalties associated with unfiled returns. To help, in this post we answer some of the most frequently asked questions on unfiled returns. Read on.
I did not file my tax returns. What could be the consequences?
The IRS can charge a 5 percent penalty per month (that can go up to 25 percent) on your tax dues, if you fail to file your tax returns. Filing late taxes would also mean that you lose your entitlement to claim a tax refund. You may also lose your chance of rolling the losses suffered by you in a particular year to any future year. In some cases you may also be asked to pay a fine of up to $25,000, or you may be jailed.
Can I e-File a late tax return?
Yes, you can e-File a late tax return, however, you can do that only up to six months past the due date for filing your returns. Once you are past that time limit, the only option out for you is to mail your tax return.
Will the IRS contact me if I do not file my tax return?
Yes, the IRS will try to reach out to you for unfiled returns. It will send out notices to the mailing address that was last updated on your file. While initially the IRS would simply send reminders asking you to pay the due taxes, later they will start sending notices demanding you to pay the dues within 30 days. In case you fail to respond, the IRS will file a Substitute for Returns (SFR).
What is an SFR?
If a taxpayer does not file their returns, the IRS prepares a substitute for return basis the taxpayer’s wage and income reported (from relevant documents) during that year. The worst thing about SFR is that the taxes assessed by the IRS are higher than what a taxpayer actually owes to the IRS. That is because when preparing the SFR the IRS does not consider factors such as whether the taxpayer was married and filing jointly, or if they had any dependants for who they could have claimed tax returns.
I lost my W-2 Documents and 1099s. What should I do now?
In case you have lost your W-2 documents or 1099s, you can ask the business or organization that issued those forms. Usually, companies keep a record of these documents for seven to ten years. Just in case you are unable to get the documents from the company, contact the IRS and ask it for a wage and income transcript(s). You can also hire an IRS tax law expert to help you get a hold of the required documents.
Must Read: 4 Steps to Filing Your Unfiled Tax Returns
Need help?
If you have any unfiled taxes do not delay, file them now. If you need help, call the Law Offices of Nick Nemeth today at (972) 426-2553 and schedule your free and confidential consultation with Nick Nemeth to get the best resolution for your circumstance.
