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Why you should file your tax return

On Behalf of | Sep 20, 2022 | Individual Taxes

Most California residents are required to file their personal federal income tax returns by the middle of April each year. The deadline to file is pushed back by six months if requested extension requests are approved. You may experience many negative consequences if you fail to file by the deadline or fail to file at all.

The consequences of not filing a return

The IRS will charge a failure to file penalty equal to 5% of what you owe in the tax year that you didn’t file a return. The penalty maxes out at 25% of your balance and will remain in place until it is paid in full. It’s important to note that interest may accrue on any penalty that is assessed until it is paid. You will also be assessed a penalty for filing your tax return more than 60 days after it is due. There is also a chance that the IRS will file a return on your behalf, which may not accurately reflect your current tax situation.

Criminal or civil penalties may apply

According to federal tax laws, you could be fined or sent to jail if you’re found to have willfully failed to file a tax return. In addition, penalties may be enhanced if there is reason to believe that you failed to take such a step in an effort to avoid paying taxes.

As a general rule, you’re required to file a tax return if you earn more than the amount of your standard deduction. However, even if you don’t have to file, it may be beneficial to do so as it may allow you to claim deductions or credits. Depending on your tax situation, these credits or deductions may entitle you to a refund from the IRS.