Unfiled Tax Returns: What Do You Do?

by McNair Law Firm, P.A.

The United States has a voluntary income tax reporting system.  U.S. citizens, permanent residents, and businesses here must annually file income tax returns with the IRS, reporting their “worldwide income”, deductions, and their “net taxable income”, and pay income taxes to the IRS based on this amount.

The rate of tax is “progressive”; that is, it increases as taxable income goes up.  There is a minimum level of income for which an annual tax return is not required to be filed and which varies on filing status.  For example, in 2016 for a single (unmarried) taxpayer, the individual must generally have at least $10,350 to require a return to be filed for the year.  Even if an individual or business has only income they believe may be “exempt” from income tax (e.g. certain social security payments, interest in municipal bonds, etc.), a tax return must still be filed.

Penalties and interest for not filing a required tax return can be substantial…

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