what happens if you forget to file a w2

If you somehow missed all the clues that Tax Day was Apr 15 (every year), or all the specials from taxation preparers running up to this yr'southward Tax Day, y'all may be wondering what to do at present.

Should you just ignore it and swear to do better next year? (Answer: No)

Should you lot panic? (Answer: No)

The world won't stop if you don't file on time, just there can be financial consequences involved, depending on your circumstances. Read on to find out what REALLY happens if you don't file your taxes.

To Open with Good News…

At that place is one state of affairs where not filing on time isn't completely bad news. If you owe $0 (that's zero dollars) in taxes or if you are owed a refund, you lot are non required to file your taxes. If you exercise file late, there is no penalty.

Isn't that neat? Except, if yous are owed a refund and don't file within three years of the associated tax engagement, the IRS gets to keep it. So you don't have to rush, only if you want your refund, y'all might as well do it. At least you have three years, just yous won't become paid whatever interest.

Important Distinction

At that place is a departure between failure-to-file and failure-to-pay. And, oddly enough, it volition price you more than in penalties for failure to file.

Still, information technology'due south important to sympathize that filing on time is the almost of import affair yous can do. Y'all either need to file your income tax forms on Tax Twenty-four hour period before midnight or y'all need to file for an extension.

Nonetheless, if you file for an extension, that's merely for filing your tax forms. You're still expected to pay on fourth dimension. Distressing, no extensions for that.

Failure to File

If yous fail to file your tax return on time, the IRS can and will penalize you lot a late filing fee. This year the fee is v% of the taxes you owe for each month by tax day that you fail to file. The penalisation maxes out at 25% of the taxes y'all owe.

Withal, if yous don't file inside lx days of the April due date, the minimum penalization is $210 or 100% of your unpaid taxation, whichever is less. Therefore, if you lot owed $210 in taxes and you lot waited 60 days to file, yous wind up paying $420 full.

At that place are extenuating circumstances under which the IRS will waive tardily filing penalties. Some disaster victims, military service members and eligible support personnel in combat zones, and U.S. citizens and resident aliens who live and work outside the U.S. and Puerto Rico, have more than time to file and pay.

Failure to Pay

Penalties for failing to pay your taxes on time are actually lower than for filing late. For each month by the payment appointment you will be assessed 0.5% of your total tax bill as a penalty. This fee also maxes out at 25% of your tax bill. However, interest still accrues on the unpaid taxes over and above the penalization for declining to pay on time.

Involvement begins to accrue on unpaid taxes one mean solar day after the bill was due. Interest compounds daily until the bill is paid in full. The rate charged is the Federal short-term interest charge per unit plus iii%. Exist enlightened the Federal short-term rate is set every three months; currently the interest rate is 5% (short-term rates are 2% plus the mandatory 3%). If the short-term rate goes upward before you pay in full, your involvement rate goes upwards, also.

You tin can reduce the penalisation and involvement past paying as much equally possible on time. The less you owe, the less you will have to pay extra.

If you neglect to file equally well as neglect to pay on fourth dimension, the failure-to-pay penalisation is waived and you only pay for failing to file.

First Time Penalty Abatement

If you come across the eligibility requirements, you may exist able to take your first penalty waived.

• If y'all were not required to file a return before you did non receive a penalisation for the previous 3 years, and
• You filed any required returns or filed an extension for all previous years, and
• Yous paid or fix a payment plan for any tax due. As well, if you take a payment plan, y'all must be current.

If you practise not authorize for the abatement, you will get lower penalties for tardily payment than for belatedly filing. But don't forget that involvement begins to accrue the solar day after the due date and compounds daily, so information technology may not be worth it to follow that path.

The 90% Rule

Most years, if you have paid ninety% of your residual due on Tax Day, the IRS will not penalize y'all for declining to pay proper estimated taxes. (The rule doesn't apply to tax withholding by your employer.) However, for this yr, if you paid at least fourscore% of your tax liability through paycheck withholdings, quarterly estimated revenue enhancement payments, or a combination of the ii, you will not face whatsoever IRS penalties.

The reason for the change is because 2018 was the first year many of the new provisions of the Tax Cuts and Jobs Act of 2017 became effective. Taxpayers may not have had the right corporeality of taxes taken out of their wages or made the correct estimated payments.

The new federal tax withholding tables weren't issued until early terminal year, so employers didn't have a take chances to calculate the right amount of withholding from the beginning of 2018. Besides, the new tables didn't completely factor in other changes, including the suspension of dependency exemptions and reduced itemized deductions that were part of the tax law change.

What's the Worst That Can Happen?

If you don't file your taxes or file for an extension, you will accrue penalties that can exist up to 25% of the taxes you owe. If you owe $v,000, your penalization volition exist $1,250.

If you don't file for more than 60 days, the penalty could be double your tax bill. The penalty compounds monthly until you file. If you completely neglect to pay your taxes and ignore the IRS, the government tin can outset garnishing your wages, placing liens on your holding, and commencement talking about jail time.

And that is what REALLY happens if you don't file your taxes.

The best matter you can do is to file and pay as presently as possible to avoid building up penalties and interest. Then plan better for next Tax Day by putting a procedure in place right at present to go along up with all your documentation. Cheque to brand sure your withholdings are correct and that y'all are paying the appropriate corporeality of estimated taxes.

And, next year, proceed an eye on the calendar.

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Source: https://www.toptaxdefenders.com/blog/what-really-happens-if-you-dont-file-your-taxes

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