Even though you do not owe taxes, you must prepare your tax report, or you will face many unpleasant consequences. Most people fear to present their tax returns every year and this happens whether or not they owe taxes to the government.
The IRS considers a very serious offense that you not present your tax return, rather than presenting it and not paying for it. The penalty for not paying on time is 0.5%, however, not presenting it will cause that the 5% of the taxes that you owe multiply by 10. Both fines are limited to 25%. For example, if you owe $1000 and you do not present your tax return, the fine will be $500, but if you present it the fine will be $250, in other words, the half.
The IRS replaces your tax report
If you do not present your tax return, the IRS will prepare it based on the income registered during that year and will not consider any deductions or tax credits that you may be entitled to. In this way, a large percentage of the taxes reports calculated by the IRS will be very high, because they add penalties and interest charges.
You will lose your refund.
If you finally failed to present your tax return, you might be surprised of losing your refunds. However, there is a limit of three years to claim them. If you wait too long to present your tax return you could lose a good amount of refunds. According to the IRS, there are over $1 billion in unclaimed refunds.
You will lose your Social Security credits
For self-employed workers, like most truckers, failure to present their tax report means an extra risk. Remember that your tax return is the only way to show to the federal government how much you have earned and know how many credits you have accumulated in your Social Security. In this context, if you do not present your tax report, there will be no Social Security income report and this could mean a large loss of money for your retirement.
That could damage your credit, your passport could be cancelled or you could go to prison.
If you continue to fail to present your tax report and refuse to pay your taxes, the IRS will take severe measures. Your credit history will be affected and the Department of State will be notified to cancel your passport. In extreme circumstances, the IRS could charge you with tax evasion and send you to a federal jail.
Now you know the horrible consequences of not complying with your obligation of preparing and presenting your taxes.