Depending on your income and history working in the United States, you may be someone who rarely or never pays taxes. While it’s completely acceptable not to pay taxes under some circumstances, you still need to file a tax return in most cases.
Failing to file a tax return for a single year, let alone many, may trigger an investigation by the Internal Revenue Service. It’s important to fix this issue as soon as you can.
What is or is not a tax non-filer?
The term “tax non-filer” typically refers to people who are not required to file a tax return and who aren’t planning to file one. These individuals still need to fill out the IRS non-filer form.
Those who are able to skip filing a tax return may include those who:
- Earn less than $12,550, the standard tax deduction for 2021 (this may be higher or lower in 2022)
- Are under the age of 65
- Don’t have special circumstances requiring you to file, such as self-employment income
- Are single
As long as your income is less than your standard deduction, you typically do not need to file. However, many people choose to do so, because they may be able to seek credits and a tax return.
What happens if you choose not to file a tax return but you needed to?
It’s a good idea to file an amended return or initial return as soon as possible, even if it’s late. You may be subject to failure-to-file penalties unless you can show a reasonable explanation for failing to file your tax return. If you’re owed a refund, you won’t face a penalty for failing to file, but you could lose your refund if you miss the statute of limitations. You’ll need to make a claim for your refund within three years if you want to receive it.
If you can’t pay what you are owed, then there may be options to help you. You’ll need to file your tax return first. Then, you may be able to set up a payment play or negotiate a settlement to get your taxes back up to date.