What Happens If You Don’t Pay Your Taxes?

by February 25, 2015

You spent a frustrating weekend sorting through a mountain of receipts, or you’re irritated because you misplaced your W-2. And the idea struck you: what if I just don’t pay my taxes this year?

It’s tempting to put the task aside. DON’T, according to U.S. News and World Report. You could face penalties, it might affect your credit worthiness, and basically it is a whole mess of trouble.

Millennials and Money logoHere are some of the bad things that could happen when you can’t get the job done.

A bigger tax bill. If you don’t compute what you owe the government, the government will do it for you. And, you might end up as what tax expert John Gregory calls the worst case scenario: a single taxpayer with one exemption.

Yes, it takes time to add up all those receipts from CVS and track down the pink slips you received from donating to the Salvation Army. But if you don’t, Uncle Sam is not going to give you credit for possible deductions.

A black mark on your credit report. If you wind up with several years worth of back taxes, the government could put a lien on your property. And if things are so bad that you’re ignoring the IRS, you probably will wind up with a state lien or a county lien, as well.

Tax liens often show up on your credit record as unpaid debts. They could spell the difference between getting a low interest rate and a higher one, if you need to borrow cash from a bank or credit union.

Embarrassment when you buy a house. Someday, you might decide it’s time to own the place where you live. Many mortgage companies expect you to provide several years of tax returns. What are you going to tell your realtor when you can’t produce the documents?

If you need more time to file, you can always ask the government for an extension. And if you can’t pay the bill that you’re facing, send in something with your return and then negotiate an installment plan.

Besides, you shouldn’t be getting discouraged now. There’s plenty of time to get things finished before April 15. And no, doing “research” for your March Madness bracket is not an excuse to avoid the inevitable.

STORY IDEAS

Internal Revenue Service

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