The thought of not filing your taxes may have crossed your mind at least once in your life especially when you feel greedy about paying a hefty amount in direct taxes. With world inflation on the rise, it is natural to get such thoughts, but this does not mean that you give these thoughts any heed because it can lead to bad consequences.
In this article, we will tell you about the possible penalties that you may face in case you decide to not file your taxes. The IRS is a big organization and if you think this will be a reason for them not noticing a missing tax filing then you’re wrong.
Some of the penalties are as follows.
Failure to File Taxes
If you fail to file your taxes on the given deadline or you forget to do so then you will be given a penalty. Usually, US expats are given a further deadline because their matters are quite complicated in comparison to the US citizens living in America. The penalty to file taxes is first registered under failure to file. This penalty is usually 5% of the amount of the unpaid tax. If the return is late for several months, then you will have to pay this amount for every month as a penalty.
The good part is that the penalty cannot exceed 25% of the total amount of unpaid tax. But the downfall is that the penalty for not filing for more than 60 days past the deadline or extension date is 100% of the unpaid tax. So if you are wise enough and you love your money, you should make sure to file your taxes on time. If you are an Expat who has a lot on your plate and can’t find time to consult with your lawyer in the US because of the time gap, then you can hire a foreign national tax consultant to help you.
Failure to Pay Taxes
The penalty that you face if you fail to pay your taxes is called “Failure-to-Pay”. You will be facing this penalty even if you have filed your taxes in time but due to some reason failed to pay on time. This penalty is much lower i.e. 0.5% of the unpaid amount in comparison to the penalty you have to pay for not filing taxes on time. This penalty can be avoided by filing for an extension and paying at least 90% of your owed taxes by the initial due date and the remainder by the extension date.
In a certain month if you fail to file and pay your taxes then you can expect the IRS to be a bit merciful if you are able to show a proper cause for the delay in taxes.
If you are a US expat and you pay your tax after the standard April deadline but before the June 15th expat filing deadline, then you will not be required to pay the penalty but you will have to pay interest on the amount due from the 15th of April even if you have an extension.