What are the Penalties for not Filing 2012 Taxes?

in Tax Information

If you are thinking about not filing your taxes for the 2012 year, think again. Even if you currently do not have enough money to pay the amount that is owed, it is still a better decision to file the taxes and deal with the consequences than deciding to try and trick the IRS. It may take years to happen, but the IRS does eventually find all people who fail to report their income and then impose stiff penalties and fines. If you want more convincing, here is a summary of what happens when the IRS finds out that you have not filed a tax return for a specific year.

When the omission is discovered, the IRS could decide to file a substitute return. These returns are used for non-filers and only have the bare minimum of deductions. This translates to more taxes being owed than if you had filed your taxes, not to mention the fines and penalties that will be levied against you. On a base level, the IRS will charge you 5% of the owed taxes each month that goes past the deadline. This penalty can accumulate to a maximum of one quarter of your taxes if left for five months. However, once the lateness crosses 60 days overdue, a minimum of $100 or 100% of the amount that is owed is set as the penalty, whichever is less. The only way to get out of this penalty is to show a real and documented reason why you failed to file within the given deadline.

For a person that files their tax return, but fails to pay the amount of tax that is owed, the penalty is similar to choosing not to file at all. A fee of 0.5% is assessed for each month that the payment is late, with a maximum amount of one quarter of the unpaid tax. However, there is no extra penalty if the time before payment goes later than 60 days. This is a better situation than failing to file at all, meaning that a person should always file on time whenever possible, even if they will not be able to pay until a later date.

There are other situations where you could be faced with a penalty, mainly dealing with the failure to supply complete or accurate information on your tax return. If it is clear that you have purposely not given this information or tried to interfere with the tax laws, you may be assessed a $500 fee that is known as the frivolous return penalty. However, the biggest penalty comes into play if you report much less than your actual income. To be considered excessive, the amount reported must differ from the actual income by at least 10% or amount to a total of more than $5,000. These situations are taken on a case by case basis and can have heavy fines or even imprisonment as a consequence. Instead of trying to trick the IRS or give them incorrect information, why not hire a tax professional and have your tax return done quickly and accurately?


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