Why It Is Important To File Back Taxes?

Answer 1

The reason that so many people do not file back taxes is because they are afraid of the penalties that they will incur if they were to file them. Ultimately, it is never good to skip filling out a tax return. It is dishonest, and it can lead to more headaches than it is worth. In addition to that, the process normally snowballs into a yearly occurrence and the penalties can really begin to add up in a hurry. It is much better to file back taxes on your own and not waiting until the IRS decides to audit your tax returns and finds out that you haven’t paid taxes in over five years.

Sooner or later, the IRS will catch up to your lack of paying your yearly income taxes. The IRS has become much more diligent in overseeing the process that ultimately leads to a person’s audit. When your back taxes come due from the IRS, and they ultimately will, you will be stuck with hefty fines that probably could have been much smaller had you just filed the tax returns yourself in the first place.

There is also a chance that you are in line for a large refund, but you will personally never find out because you chose not to file your taxes. The government will hold on to your money forever, if you do not produce documents saying that you rightfully deserve that particular amount of money. Getting back refunds that are rightfully yours is another great reason to file back taxes. You never know how much money our government really does owe you.

Penalties and interest payments on the money that you owe to the government go up monthly. The interest rate is applied to the amount of money that is left to be paid. So, as each month passes, the interest on your penalties (or the money that you ultimately owe the government) continues to accrue under your name until an audit is finally done. To stop this process, it is important to get all of your back taxes filed to ensure that you are losing the least amount of money possible.

From the points listed above, it becomes relatively clear that filing back taxes now instead of waiting is in your best interests. You could possibly either be owed money by the government, or you are slowly digging yourself further and further into debt with the IRS. For these reasons, it is immensely important that back taxes are filed.