The Internal Revenue Service doesn’t require Texas residents — or residents of any state — to file federal tax returns if their income falls below a taxable threshold. Since so many factors come into play with determining taxable income, it’s still a good idea for all individuals to complete federal income tax forms to find out if they owe taxes or are owed a refund. They can then decide whether or not to file.
Not filing when you are required to do so can result in a number of consequences. Obviously, if you are owed a tax refund, then you lose out on that refund and you might owe fines for not filing.
If you do owe a refund and fail to file, you incur penalties and interests from the date the taxes were due in addition to any fines for not filing or for filing late. You might think you can get away with not filing and the IRS will never know, but the agency usually figures it out eventually. This is because anyone who pays you income via W2, 1099 or other processes must submit documentation of those payments to the IRS. In fact, since most organizations who pay you get some sort of tax benefit by deducting those payments from their own income, they are certain to report it.
The failure to file penalty and interest associated with late tax payments can increase the amount you owe the IRS by more than a quarter! If you don’t owe taxes but might be owed a refund, then you have up to three years to file a return before you forfeit the refund. Even if you file within the three-year period, you might see a reduced refund amount due to late filing.
Working with a professional to file tax returns can help you get accurate returns in on time. If you haven’t filed returns for previous years, then working with someone to file those returns and negotiate payments with the IRS could reduce immediate tax burdens so you can continue with your life.
Source: IRS, “Help Yourself by Filing Past-Due Tax Returns” accessed Mar. 20, 2015
