I know a lot of people who say that if the IRS owes them money that they don’t file their taxes. Some of these folks are owed literally hundreds, even thousands of dollars. I can’t comprehend why they wouldn’t want their money, but from an accounting perspective it’s still a bad idea not to file yearly and on time.
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One fact is that if you’re sure you don’t owe taxes, you’re exempt from filing by the yearly deadline. The magic word there is “sure”. If you file later in the year or the next year and they calculate that you indeed owed something, you’ll not only earn a penalty but it’ll be calculated monthly for every month you were delinquent. The rate won’t be the same each month either; the balance will compound like a credit card.
Something else to think about is that if you wait longer than 3 years to file when you’re owed a refund, the federal government takes it and you’re never getting it back. I mention this because I know people who say they file every 2 or 3 years. It’s reckless to play with money you’re owed this way because the federal government could always change the rules… along with adding other rules that are to your detriment.
For the above we’re only talking about personal taxes, and mainly for single filers. What about taxes related to your small or sole proprietorship?
Business taxes are expected to be filed yearly; period! If your net income is more than $400 you have to file or face a penalty. If you’re incorporated, not only do you have to file your personal taxes on time but you need to file your corporate taxes a month earlier to avoid what could end up being very stiff penalties.
Don’t take chances with your taxes. If you’re someone who procrastinates, forgets the date taxes are due or fears you might be doing it wrong, think about hiring an accountant to help you. That’s what we’re here for. 😉
