What Happens If You Don’t Do Your Taxes?

If you perhaps missed the Tax Day or even seemed to ignore the specials concerning your tax until the Tax day came, you may be wondering what it is you should do? Some people may feel it is best to ignore it and just strive to improve next year. This is, however, a terrible idea. But should you panic? The answer is also a big no! The thing is that truth is that the world won’t come to an end simply because you forgot to file our taxes at the right time. However, there are some financial implications of forgetting or refusing to file them. Here we will show you a few things you should know about your tax.

Let’s start with something great about taxes!

Tax professionals can be valuable assets during the time of taxes especially as it does with compliance and legal issues. The information contained in the Tax Act is so much that the average business owner may not be able to handle them with their heads.

Therefore, since all businesses are quite different, it is imperative to factor in your situation to determine what it is you need. This ranges from accounting support to your daily bookkeeping activities. With the growth of your company, you can maximize the income of your business by engaging the services of a tax specialist.

Know the difference in some terms with taxes

One thing accounting professionals will tell you is that there is a distinct difference between failure to pay and failure to file. It is also worthy of note that it will cost more when you fail to file. It is however vital that you know that filing your taxes on time is one of the most critical things you have to do. It is either you file your income tax before the expiration of the date or you will have to file for an extension.

What happens to me if I do not file my taxes?

If you do not pay up your taxes, the Canada Revenue Agency will dispatch letters requesting that you pay their money. If you owe a large amount of money and do not pay up the same, they are empowered to freeze your account, put a lien on your account and garnishee your wages.

In a situation where you are not able to afford to pay up the taxes you owe, the best thing to do would be to contact the CRA and see if you could work out a payment plan. More often than not, if you can pay off your balance owing within twelve months, the CRA would be willing to work it out with you. You may send them post-dated cheques and they will not take any further action against you. In a situation where what you owe is beyond what can be paid within a few months, there are a few options you can opt for. First, you may engage the services of a tax lawyer or a bookkeeping professional who can take a good look at your situation. In a case where the previous tax returns were filed the wrong way and can be modified to lower the balance owing, you may make payment arrangements.

However, if you committed tax fraud by under-reporting your income, you may have to engage a tax lawyer.
In a situation where the assessed amounts are correct and you do not have any hope of paying, you may opt for personal bankruptcy. In summary, when you are faced with tax-related issues, doing nothing is not advisable. The government never forgets you owe them and they will always do whatever it takes to get their money.

Understanding first-time penalty abatement

If you qualify and engage the services of bookkeeping professionals, chances are that you may have your first penalty waved off. The first instance is if you were not asked to file your return before you didn’t get a penalty for the past three years and you filed an extension for the previous years. Also, if you set up and paid up for the tax that was due.

If you are however not qualified for the abatement, there are chances that you will be punished with lower penalties for late payment as against not paying at all. One thing you should however not forget is that interest soon starts to climb on it from the very first day it was due.

Will I be doomed?

In a case where you do not file for taxes or even file for an extension, you will be faced with accrued penalties that can get up to twenty-five percent of what you owe. For instance, if you owe $5,000 you will be faced with a penalty of $1,250. Also if you do not file for over sixty days, you may realize that the penalty will be twice the tax bill. Also, the penalty will mathematically compound pending when you file.

However, if you ignore paying them up, the government may begin taking steps such as placing liens on your assets and garnishing our pay. You may even be faced with jail time.

It is therefore ideal that you file and pay them as quickly as you can so that you do not compound your woes. You can also better prepare for the next Tax Day by simply setting in motion a process that can keep up with the whole documentation. Also, ensure that your withholdings are spot on and you are paying the right amount of money.

Why do I need accounting professionals to do my taxes?

Doing our tax can be challenging depending on how complex your situation is at the moment. For instance, if you are an individual that is filling out simple tax returns, there is a high chance that you can deal with it yourself. However, in a situation where your tax issues are a bit more complex, you may have to engage the services of bookkeeping professionals. Such people will save you precious time and money.

If you own side hustle or small business, you certainly need their services. There are several tax write-offs and a professional will have the eagle eyes to help you go through them.

Also, in a situation where the relevant agency contacts you for something as basic as explaining your expenses regarding something you bought, you may have to engage a professional. You mustn’t give them any wrong information. A good professional understands the language of the CRA. Also, you will need a professional if you are personally steering your way into retirement. Your RRSP is usually not restricted to bonds, stocks, and mutual funds. Hence, you may also make use of several retirement platforms to invest such as real estate. When it comes to filling such returns, it can be a bit of a hassle. In such a situation, you may have to seek help.

Finally, if you belong to the category of those who are planning for the college years of their kids, you may have to engage the services of an expert in the field of bookkeeping. You certainly want to make sure that you do not have unwanted income or assets in the name of your children. These and more are why you should engage the services of bookkeeping professionals. Get help with your taxes by visiting the Tax Preparation service. 

Final words

The beauty of your life is heavily linked to the quality of the choices you make. When it comes to the issue of taxation, it cannot be overemphasized that you have to make the best choices if possible. Some people were once rich but ended up poor and miserable because of the way they handled their tax issues. This is why you have to be mindful of the steps you take in this regard.