Unfiled Tax Returns: Guidelines and Info on Filing Tax Returns Late

unfiled tax return guide

Every year millions of Americans finish the year with an unfiled tax return or non-filed tax return. Some don’t need to file, but many others forget and ignore the process. Some get confused as to whether they need to file. Filing requirements vary based on your income and several other factors.

As of the tax year 2021, you must file a return if you fall into any of the following categories:

  • Single, under age 65, and gross income exceeds $12,550
  • Single, 65 or older, and income exceeds $14,250.
  • Married filing jointly, under age 65, and income exceeds $25,100.
  • Married filing jointly, one spouse under 65 and one older than 65, and income exceeds $26,450.
  • Married filing jointly, both at age 65 or older, and income exceeds $27,800.
  • Married Filing separately, any age and income exceed $5.
  • You earned more than $400 from self-employment, after expenses.
  • Sold your home during the tax year.
  • Owe taxes on your retirement account.
  • Owe Social Security or Medicare taxes on tips from your employer.

The IRS updates these numbers annually, and there are different income thresholds for widows with dependent children and people who are married filing separately. Therefore, to double-check if you have a filing requirement, consult the IRS’s instructions for the 1040 form for the year in question.

Regarding state taxes, every start has different rules, and some states don’t even have an income tax. Therefore, visit the website for your state’s department of revenue to find out if you need to file. In the meantime, here are some useful links for additional information.


Consequences for Not Filing IRS Tax Returns or Filing Late

If you are supposed to file a federal tax return, but you don’t, you face penalties, interest, and other collection activities. Moreover, the consequences can be severe and financially debilitating.

Consequences for not filing your state return vary based on where you live, but states often use the same collection methods as the IRS. That includes tax liens, wage garnishments, and asset seizures. Furthermore, some states suspend driver’s licenses, real estate licenses and so forth. This link takes a closer look at the consequences of not filing your Federal tax return or filing it late.

Haven’t Filed Taxes in 1, 2, 3, 5, or 10+ Years? IRS Implications by Year

Each year that taxes remain unfiled, the consequences change. Many times it can just mean a loss of a refund, but other times it can lead to serious tax penalties and collection problems.

Know the consequences you may face by year if you owe tax or are owed a refund. If the IRS believes that you owe taxes it is likely that they will file a Substitute for Return on your behalf. This usually will claim you owe more taxes than you should. Even if now taxes are owed, your right to claim a refund goes away after 3 years.

How to File Unfiled IRS or Old State Tax Returns

If you have not filed a return, eventually the IRS may create a Substitute for Return (SFR) for you. In other words, the IRS files for you. The IRS usually sends you a letter explaining how they assessed the taxes and a form to consent to their assessment. Hence, you may not want to sign it because the IRS will give you only the standard deduction, one exemption, and no dependents. If you do not sign it, eventually they will assess the balance against you anyway. Therefore, file a tax return yourself, and send it to the IRS as a reconsideration request. This link explains how to file a tax return if you have not done so. The advice applies whether you’ve received an SFR or not.

IRS Failure-to-File Penalty: Penalties for Not Filing a Tax Return

The IRS has a significant penalty for not filing a tax return. Consequently, the IRS assesses a penalty of 5% of your balance for every month your tax return is late. Also, this fine maxes out at 25% of your total tax liability. Take a look at how the IRS calculates this penalty and learn how you can get it erased.

Unfiled IRS Tax Returns: Frequently Asked Questions (FAQs)

Find out answers to commonly asked questions about filing tax returns. Review specifics related to filing your tax return late.

Disclaimer: The content on this website is for educational purposes only and does not serve as legal or tax advice. For specific advice regarding your tax situation, contact a licensed tax professional or tax attorney.

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