Nextwave Finance

Do I Have To File A Tax Return?

March 3rd, 2008 | by rachel |

If you find yourself asking this question, you are not alone.  In strictly technical terms, U.S. income tax is “voluntary”.  That does not, however, mean that it’s NOT mandatory!  It allows taxpayers some flexibility in structuring their finances to limit tax liability.  Make no mistake, though.  Having options about how much tax you owe doesn’t in any way mean that you have the option about whether or not to file.  Everyone should file a return every year.  Paying taxes isn’t fun but it’s better than having the IRS come looking for you!

TAX RETURNS are the official forms completed by taxpayers each year.  These returns include specific information about income, deductions and credits for the previous calendar year.  The information contained in a tax return establishes the amount of tax liability for taxpayers.  You might also be interested to know:

• The deadline for filing tax returns is April 15 each year.  If that date falls on a weekend or holiday, the filing deadline is extended until the following business day. 
• Filing extensions are available, without penalty, for all taxpayers.  Extensions are not automatic and they must be applied for prior to the regular filing deadline.  Additionally, extensions do NOT apply to any payments that are owed.  They only apply to the return itself.
• As far as the IRS is concerned, filing a tax return and paying taxes owed are 2 different things.  There are penalties for failing to do either.  Failing to do both can lead to multiple penalties.

There is definitely an ANTITAX MOVEMENT in the United States.  Generally, these people fall into one of 3 categories:

• “Tax Protesters” claim that tax laws are unlawful, against the U.S. Constitution and/or illegal and, thus, don’t apply to them.
• “Tax Resisters” don’t pay taxes because of they oppose a government, institution and/or its policies.  Usually, these people do not dispute the legality of the taxes or the authority of the government to impose them.
• “The 861 Position” people attempt to manipulate section 861 of the U.S. Tax Code (and its wording) to keep from paying taxes.

Not filing a required tax return and/or not paying taxes owed are just some of the TAX CRIMES that the IRS deals with each year. Officially, there are 3 tax related crimes that someone can be charged with.

•  Tax evasion is, perhaps, the most serious crime is a felony with sentences of up to 5 years and fines of up to $5000. 
• Filing a false return, also a felony, is punishable by up to 3 years in prison and/or $100,000 in fines.
•  Not filing a return at all is a misdemeanor and carries sentences of up to 1 year in prison and/or fines of $25,000 for EACH year that a return is not filed.

In spite of its, sometimes, cold, calculating image, the IRS does work with taxpayers with financial difficulties to establish PAYMENT PLANS.  Depending on your circumstances, these plans can help you stay out of trouble with the government.  When you owe taxes, it is important to pay SOMETHING, even if it is not all you owe.  Interest on unpaid taxes is compounded daily so reducing the amount you owe, even by a little bit, will save money in the long run.  If you cannot pay all the taxes you owe, one of these options might work for you:

• “installment agreement” - This is a monthly payment plan that lets you pay the taxes you owe over time.
• “temporary delay” - For taxpayers with extreme financial hardship, it might be possible to convince the IRS to delay collecting taxes for a time.  While this does ease immediate pressure, it also adds to the tax burden.  Even if the IRS agrees to delay collection, interest and penalties will accrue.
• “offer in compromise” - This is the same as a settlement for a financial obligation.  IF you qualify, the IRS agrees to accept a reduced amount of money as settlement in full for your tax bill.  There are specific requirements and fees that apply to this payment plan.  It is definitely a last resort!

So, do you have to file a tax return?  Absolutely!  Can you get away with not filing one?  Maybe, for a time.  Ultimately, though, the IRS will catch up to you.  When they do, filing and paying then (plus interest and penalties) will be much worse than just filing when you are supposed to.  Hurry up and get started.  April 15 is just 43 days away!