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What Happens if You Don't File Your Tax Return?

Did you forget to file your tax return? Did you not know you needed to file a tax return? Were you trying to evade taxes? Find out what will happen to you.

What happens if I forgot to file my tax return?

It may seem implausible that someone forgot to file their taxes, but it happens. About 7 million people fail to file their tax return each year.

Something big happens in your life, your tax return slips your mind, and suddenly it’s a year later when you remember you never filed. If you forgot to file your taxes, here’s what will happen and what you should do.

What if I forgot to file and the IRS owes me a refund?

If you’re owed a refund, you’re in luck. Your taxes were completely paid through withholding or estimated tax payments. This means you won’t owe interest or penalties.

To get your refund, you’ll need to file your return just as you would have if you filed on time. You have up to three years from the original due date of your return, or you’ll forfeit your refund.

What if I forgot to file and I owe the IRS?

If you owe the IRS money, you have a problem. First, there are failing to file and failing to pay penalties that could be as high as 25% of the taxes you owed depending on how late you filed. Second, interest will accrue on your balance until it’s paid. Third, you may have to convince the IRS that you weren’t trying to evade taxes.

You should also know that there is no statute of limitations for failing to file a tax return. If you just realized you didn’t file a couple of years ago, you can’t run out the clock in the hope of not having to pay the taxes you owe.

The only way to stop interest and penalties from accruing is to file a return and pay your balance as soon as possible.

Can I just wait until I get a notice from the IRS?

Waiting until you receive a notice from the IRS is the worst thing you can do. Interest and penalties will accrue until you pay your tax liability in full. If the IRS believes you knew you had additional income but didn’t report it, you may be subject to additional civil penalties or criminal tax evasion charges.

Further, the IRS’s chances of finding out you didn’t file are almost 100%. If you got just one W-2, 1099, or other information return, the IRS computers might flag your account when they can’t find your return.

In short, you usually want to file your return as soon as possible.

How many years can you go without filing taxes?

How long you can go without filing taxes depends on what information the IRS has and what they think you owe. If you owe taxes and they know about your income, you may get a notice within just a few months. If you had more than enough taxes withheld to cover what you owe and should get a refund, the IRS may never contact you.

Some sources of income, like gambling or self-employment, are hard for the IRS to track. It may be possible to get away without filing or paying taxes for years. However, there is a good chance the IRS will find out, charge you back taxes and penalties for every year, and file criminal charges.

The only time it’s a good idea to not file a tax return is when the IRS says you don’t need to.