The deadline to file your tax return, if you requested an extension, is October 15. It is reported by the IRS that an estimated 11,000,000 taxpayers do not file their tax return each tax year period. As a result, every tax year million of taxpayers leave unclaimed money for the Treasury.
There are some taxpayers who still file paper returns and did not request direct deposit. Consequently, some errors are more likely to go undetected and some checks went uncashed. An estimated of more than 2 million paper refunds, totaling $1.2 billion, went uncashed over a 2 year period. As reported, each year, almost 700,000 of uncashed refunds were under $50.00. For tax year 2018, there were over 70,000 paper refunds filed.
Taxpayers could potentially leave money to the Treasury when they do not file their tax returns. Currently, the Internal Revenue Service and the Treasury are still waiting for some individuals to claim their stimulus payment because billion of dollars are still available to be paid. Many taxpayers who did not file have refunds unclaimed left for the service. Those refunds could not be claimed after 3 years, except under special circumstances.
The IRS has authority under the law to prepare a substitute tax return, called Substitute for Returns (SFRs), on your behalf when you did not file. When that is the case, you lost any deduction and credit that you may be entitled to. The statute of limitation rules does not exist in cases of 1) taxpayers failure to file a return and 2) assessment and collection of taxes on SFRs. You should file your own return after the IRS has prepared a return for you to claim your deductions and credits and to start the statute of limitations.
It is important to file your returns for several reasons:
. You will need at least 2 years of tax returns for real estate purchases.
. You will need your tax return to file for student loan.
. You might need proof of tax filing compliance for transactions with different government entities: local, state, and federal.
. You need to be in compliance for the past 6 years to obtain an abatement, an installment agreement, an offer in compromise from the IRS.
. You might need your tax return to apply for a loan, and more …
It is important to file your tax return even when you might not owe or do not need the refund because you never know when you would need proof of tax compliance or proof of income.
Be proactive when it comes to your tax return. Do not wait until a proof tax compliance or income is needed because it might cost you much more, and further, you might not be able to get it a the time needed. Unfortunately, many taxpayers found out during the pandemic when they were waiting for the stimulus payment or they needed to apply for the Paycheck Protection Loan that their tax returns were either not filed or filed incorrectly. Consequently, they were ineligible or have received a very low amount of loan. Some taxpayers had to file their past due tax returns to get the stimulus payment.
A professional tax return preparer could, in many instances, assist taxpayers or businesses in the reconstruction of their income and expenses in cases where they do not have record or in cases where their record keeping is not sufficient.
Do you know that you could reduce your tax liability by proper tax planning strategy?
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Tax Returns for Corporations: Due October 15, 2020
Tax Returns for Individuals: Due October 15, 2020
Estimated Tax Payment Dates
Fourth Quarter – Due January 15, 2021
OPPORTUNITY FOR ACCOUNTANTS AND TAX PREPARERS!
Your clients and potential clients would be relieved when you let them know that a team of professionals are qualified and ready to represent them before the Internal Revenue Service in matters like: tax audit, wage garnishment, tax lien, Offer in Compromise, seizure of their property, and other tax problems.
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