Are You Someone Who Doesn’t File Your Taxes On Time?

This is an interesting phenomenon we come upon every once in a while. It seems that there are a high number of people who don’t file their taxes on time. Not only that, but they might go 2 or 3 years before filing them.

While this seems odd to us, it turns out that there are two schools of thought on this.

The first is that some folks pay extra on their taxes from their paychecks. They know they’re going to get a refund back but, for some reason, decide they don’t need it immediately. So they “let it ride” and don’t worry about it.

The second are those folks who work for themselves. Some of them pay quarterly taxes, some don’t. Some of them send the letter for an extension while some don’t bother. Those folks just don’t care; it’s not that they’ll never pay their taxes, but for whatever reason they’re not in the mood to deal with it at the time taxes are due. It doesn’t matter whether they’re getting a refund or not; they have other things they feel are more important.

One of the strange things that happens is that many of those people don’t get a notification from the IRS or the state asking them where their statement is. This is probably for two reasons.

First, unless there are indications that they’ve been receiving payment for services, the IRS might not even think about sending them anything. This can happen if someone is self employed and gets paid mainly cash. It also helps if no one paying them files a 1099.

Second, if taxes have been paid, it’s possible that either state or federal taxing agencies, both of which have been reducing staff over the past few years, deal with what they already have on their plate without trying to add more work to it.

In either case, there are a few things each type needs to consider.

There will be penalties, whether you’re owed money or not. Sure, the interest rates are fairly low, so either way the penalties might not amount to much. But they might; it’s worth considering.

Second, if you owe money, not only could it be seen as tax evasion but it might trigger an audit on past years. Of course if you haven’t filed anything for all those years it might make it a bit more difficult for them, but they may have enough bodies to get into it. Also, they can go back 7 to 10 years if need be; why go through all that grief?

Whether you’re getting a refund or might owe the government something, this isn’t a good practice to continue doing. You never know what could happen and, as some people like to say, “the government doesn’t play”. Even if you owe and can’t pay, it’s better to file and wait for them to contact you. That could be a while on its own, but at least you won’t look like you’ve been dodging them.

Have You Started Budgeting Yet?

One of the earliest posts we wrote on this blog concerned budgeting. We started with the topic The Basics Of Budgeting as a baseline on how to get started. It’s still a pretty big deal to us, as it should be for you, which is why we’re revisiting the topic again.

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Our bet, if you did start back then, is threefold:

* your bills are under control

* you have more money in your checking or savings account

* you have more peace of mind because you’re not as worried about paying your bills
Continue reading Have You Started Budgeting Yet?