What if I don't file taxes?

Answer 1

If you don't file your income taxes, and you work for someone else and have reasonable withholding (i.e. you are paying nearly all your taxes automatically) it is likely nothing will happen to you. You probably don't owe much anyway. Millions of people neglect to file every year and nothing happens to most of them -- just look at our "leaders" who neglect to pay enormous sums for years. Only 60% of people filed taxes in 2004.

However, penalties and interest will build up over the years. Interest is 10% on whatever you owe, so if you owe $1000 you will have to pay $1100 if you pay a year late. If you are dead broke they can't even do this. The IRS will eventually start taking money from your various accounts if you have any. You can supposedly go to jail, but unless you are a total crook this never happens (the IRS wants money, putting you in jail doesn't make any money)

One thing to be careful about, if you pay *very* late it will be impossible to fix any incorrect into they might have about what you owe.

Remember that filing taxes doesn't have to be a bad thing. You could even get money back! If your employer has been withholding taxes for you all year, you might not owe any at all - in fact, you might even receive a refund, especially if you're eligible for tax credits like education, disaster or earned income credits. And you can get this money back less than two weeks after you file, if you file electronically.

Did you know?

Large yachts are tax deductible

Oversized vehicles often get tax breaks

There's no sales tax on stock sales

Many wealthy people classify their income as "capital gains" and pay a lower rate than if it were income

Wealthy people create corporations to hold their property, to avoid transfer taxes when they sell.

Prior to the income tax, most taxes came in the form of import tariffs and property taxes.

Some specific taxes and what the government uses them for:

• public education is paid for by state taxes
• federal gas taxes pay for a portion of highway expenses
• military expenses, such as wars, are paid for by income tax
• large bank bailouts are paid for by income tax

History

The first US income tax was signed into law by President Lincoln in 1861 to help pay Civil War expenses. It was later repealed and ruled unconstitutional. In 1913, Congress passed an amendment to the Constitution, allowing a new income tax to be enacted. The rates often change, and historically they have peaked in times of war, reaching a lofty all-time high of 94% at the end of World War II for very wealthy individuals

Taxes now provide revenue for a much broader range of services, from that smooth new highway you take to work to the ceramics program in your kid's public school. Taxes also fund parks, police, courts, libraries, health and welfare programs, and social services. These get paid for by you, the taxpayer - and when a new service is proposed, you can decide for yourself if you think it's worth the money coming out of your paycheck. And you have the opportunity to voice this decision when you vote.