Tax filing season can be a trying time for many Americans, often because they're concerned about filing all their documents correctly. And while many may catastrophize the impact of a mistake on their documents to an extreme degree, the fact is that there can be some serious fallout for those who are particularly cavalier.
One of the scariest things consumers might be faced with when they have problems dealing with a tax filing is that they can be hit with late fees if they miss the deadline. These added costs will rack up quickly for every day they fall behind, up to about 5 percent of what they owe every month. And those who filed on time but didn't pay everything they were supposed to - which can happen in a surprisingly large number of instances - will face late fees as well, but these won't be quite so large.
Further, any issues that arise as a result of problems with a tax filing, whether they're late or error-ridden, can likewise lead consumers to wait far longer than they expected for their refunds. That, of course, can create its own issues for taxpayers.
When errors or other problems with a filing are a little more extreme, they can prompt the Internal Revenue Service to begin the audit process, and this is often the scariest situation in which a taxpayer can find himself or herself. However, they should keep in mind that even here, some issues are worse than others. For instance, if the IRS has a question about a filing, such as why a taxpayer claimed what they did, they might simply send a letter asking that the person clear it up by mail. This is often done in the case of something not quite adding up, and a little extra clarification being needed.
However, things can quickly escalate as well. People may find themselves ordered to report to their local IRS office to further explain their deductions or other claims. Further, "field audits" can happen when IRS agents go to a person's home or place of business to further look into all their financial details. During these times, the burden of proving everything on a filing was as it should have been can be extremely heavy.
Those hoping to avoid such issues might want to take a few simple steps. This could include speaking with a professional to better understand their situations, and completing an online tax filing to potentially reduce errors.
Disclaimer: Tax Lounge is an informational source for industry news and related topics. We take every effort to provide honest and accurate tax information, but this information should not be a substitute for professional tax advice. Use our office locator to find your local tax office or click here to subscribe to our free newsletter.