Benjamin Franklin famously remarked that the only certainties in life are death and taxes. Just as you cannot outrun your own mortality, you likely cannot avoid paying federal taxes. Unless you are exempt from filing a tax return, you must complete and file yours by the middle of April.
The end of summer is about as far away as you can get from April 15th. Still, tax day may sneak up on you. If you have an obligation to file a tax return and fail to do so, you may face financial consequences that become more severe over time. Here are three of them.
- Late fees
To encourage taxpayers to file on time, the Internal Revenue Service assesses late penalties for filings made after April 15th. These penalties can add up quickly. In fact, you may have to pay 5% of the amount of taxes you owe for every month you are late. While the IRS typically caps this penalty at 25%, you may have to pay a substantial amount simply for being late.
- Delayed refund
If you expect to receive a tax refund, filing early is usually a good idea. That is, if you file your return in the first few weeks of the year, the IRS may process it quickly. If you wait until after April 15th, on the other hand, you may not receive your refund for weeks or months. Naturally, if the IRS delays issuing your tax refund, you cannot use your money for other purposes.
- Lost refund
While filing your tax return a month or two late may result in a delayed refund, it is possible to lose your refund altogether. While the IRS encourages taxpayers to file missed returns, you only have a three-year window to request a refund. After that time, the IRS simply adds your refund to the national treasury.
As you may suspect, there are other consequences for failing to file a timely tax return. In a nightmare situation, you could find yourself facing criminal charges. Nonetheless, there are enough financial consequences to make filing a tax return on time worthwhile.