No one likes filing their taxes, but not filing them at all is never a…
Some people avoid filing their tax returns because they don’t want to, or can’t afford to pay taxes they owe to the IRS. Others simply forget or don’t know they need to file. Whatever the reason may be, having previous years of unfiled tax returns can create problems whether you are due a refund or have a balance due to the IRS.
If you don’t file a tax return, you can’t get your tax refund. Every year, taxpayers fail to file and let the IRS hold their money interest-free. If you don’t file your return within three years of the due date, you forfeit your right to the refund money, and the IRS won’t even use this money toward any balance you owe.
If you have a balance due and don’t file your return, the IRS is going to find out eventually. If your employer or client gave you a W-2 or 1099, they also had to file a copy with the IRS. The IRS can use this and other information to determine that you should have filed a tax return.
First, you may get a notice informing you that the IRS didn’t receive your tax return. If you still don’t file the IRS can take matters into their own hands and file a return for you.
This is known as the Substitute for Return (SFR). It typically results in a higher balance due because it doesn’t give you many of the deductions or credits you should get. Even if you are due a refund, the SFR could show a balance due because it doesn’t contain your business deductions or itemized deductions, such as the mortgage interest deduction.
Once the SFR is filed, your problems are just beginning. Expect the IRS to then take the following actions:
What should you do when this happens? Every case is a little different, but you’ll probably need to complete some of these steps:
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