Penalty for not filing U.S. income tax, if one will receive a refund?

April 15, 2008 9:09 AM

U.S. tax question: if I'll definitely be receiving a refund rather than paying tax, what will happen if I neither file nor file an extension by the end of the 15th? (Will it just mean that I won't receive my refund until I do file -- or will it mean a fine/fee that reduces my eventual refund?)
posted by lorimer to work & money (19 comments total)

If they owe you money, there's no fine. But you don't get interest on the balance if you file late, and are refunded late.
posted by Class Goat at 9:26 AM on April 15

Also, if you don't file then you won't receive that stimulus check the government has been crowing about.
posted by truex at 9:33 AM on April 15

Per the IRS, you won't be penalized if you are due a refund.

Penalties and interest do not apply in years in which a taxpayer is entitled to a refund. About a third of those who file returns for past years discover they have a refund coming.

Penalties and interest apply to years in which money is owed. The interest charged on late payments changes quarterly. During the last several years the interest rate has ranged from a high of 9 percent to a low of 4 percent.
posted by weebil at 9:34 AM on April 15

Ah -- the stimulus check is ONLY for people who file by today?
posted by lorimer at 9:41 AM on April 15

(Maybe I don't understand the stimulus check.)
posted by lorimer at 9:41 AM on April 15

Ah -- the stimulus check is ONLY for people who file by today?

Yes. Or, who at least file for an extension. This is why the gummint went to the trouble of mailing everyone a notice about the the stimulus checks about 6 weeks back explaining that you had to file to get it. They even sent notices to folks on social security who normally owe no taxes, but who can get a stimulus check if and only if they file a no-tax-due return.
posted by beagle at 9:51 AM on April 15

I don't think what beagle says is correct. The stimulus is an advance on a 2008 tax credit. If you don't file by today, you won't get stimulated with the rest of us this May-June-July, but you will get a tax credit on your taxes next year (if you still meet the eligibility requirements).
posted by Dec One at 10:14 AM on April 15

Since this question seems to be answered and the thread has taken a bit of a turn, if I may piggyback:

If you didn't get one of those notification letters does that mean the government thinks that you don't qualify for the rebate? I didn't file taxes last year (didn't have any 2006 income) but had income in 2007 from which taxes were withheld, and my employer reported this income to the IRS. It seems like the IRS should have known about my income from this, even before I filed, and sent a letter on this basis.
posted by btkuhn at 10:20 AM on April 15

If I'm reading this bit from the IRS correctly, the stimulus check is not an advance on next year's credit:

"What is it? It's an economic stimulus payment that more than 130 million households will receive starting in May. It's not taxable, and it won't reduce your 2007 or 2008 refund or increase the amount you owe when you file your 2008 return."
posted by rtha at 10:20 AM on April 15 [1 favorite]

"People who file a return after April 15 will receive their economic stimulus payment, but probably about two weeks later than the schedule shows. A return must be filed by October 15 in order to receive a stimulus payment this year."

I haven't seen anything that says a person who doesn't file (or request an extension) by April 15 won't get the payment, as long as they do file by October 15.
posted by DevilsAdvocate at 10:31 AM on April 15 [1 favorite]

OP's main interest is now officially "Is the stimulus check an ADVANCE on one's 2008 refund, or is it a payment unrelated to the 2008 filing?" :)
posted by lorimer at 10:34 AM on April 15

No penalty if they owe you (rather than the other way around) - but, if you let more than three years go by, they'll say "sorry, too late, we're not paying you." In other words, you forfeit it.
posted by chez shoes at 10:34 AM on April 15

OP's main interest is now officially "Is the stimulus check an ADVANCE on one's 2008 refund, or is it a payment unrelated to the 2008 filing?" :)

The stimulus check is a rebate, not taxable next year and not an advance on next year's refund. There was a lot of confusing reporting regarding this (even on...gasp...CNN). Here's a good article that explains it clearly:

"...actually, the last time the federal government issued checks, back in 2001,the stimulus was indeed an advance, of sorts, on the Bush administration's tax cuts. The bottom line went from 15 percent 10 percent. So, maybe folks are assuming that it is the same this time. It is not. This is not an advance on next year's refund. "
posted by hulahulagirl at 10:49 AM on April 15 [1 favorite]

Like I said, it's an advance on a 2008 tax credit. On your 2008 tax return, which you'll prepare next year, you'll add a tax credit of $600 (for example) to your refund, then subtract that back out if you received a stimulus check. If you didn't receive a stimulus check, but you would have been eligible if you had done your 2007 tax return on time, then you won't subtract the $600 back out, and your refund will be $600 more than it would have been. Either way, you get stimulated.
posted by Dec One at 11:03 AM on April 15

I think the confusion is around the difference between "advance on a 2008 tax credit" and "advance on your 2008 tax refund", which are two very different things.
posted by Dec One at 11:05 AM on April 15

I was going to ask the same question except that I've used mine for the week. Thanks lorimer, you saved my sanity today.
posted by desjardins at 12:46 PM on April 15

From what I've read, it is not an advance on a 2008 tax credit nor is it an advance on your 2008 tax refund. Since receiving the stimulus check has no impact on your 2008 taxes at all, I see no way that it could be an advance on a tax credit or an advance on a tax refund. The only reason you will have to report it on your 2008 is to record how much you received and if you received the maximum amount for which you are eligible.
posted by GlowWyrm at 2:09 PM on April 15

You might think you're owed money and then realize you made a mistake. (Speaking from experience here.) So, file sooner rather than later. In fact, file while you're still honestly convinced you're owed a refund. :)

In particular, look out for the self-employment tax if you spent any time self-employed.

Taxes suck but they really aren't that hard. If anyone wants to email about ignoring taxes and then getting around to dealing with them, I might have an anecdote or two. ;) The moral of all the anecdotes is: "and then I realized it wasn't actually very hard but was kicking myself for not figuring this out earlier."
posted by salvia at 4:24 PM on April 15

On the original question: no there's no requirement to file if you do not owe taxes. However, it's entirely possible that the IRS cannot tell you don't owe if you don't file and it might appear to them that you do. If so, they might calculate your taxes themselves and if their calculation shows you owe, they'll both charge you a penalty and interest and demand you pay. They might file a lien, too, in that situation.

This happened to me. They make very little attempt calculate this accurately; they probably don't have the information to do so.

Once I filed, the result was that I was actually owed a small refund (contrasted against their calculation that I'd owed them something like forty-thousand dollars). The ironic part, though, was that they still said I owed them for the fee for filing the tax lien. By the way, my situation was that I had an enormous capital loss that they really had no way of calculating. Without the information required to calculate it, they assumed a really naive and extremely unlikely gain. IIRC, I think they just assumed the securities sale proceeds for me that year (which is all they knew about) were, in total, a capital gain—when, actually, they represented a huge capital loss for me. It was sort of satisfying, though, to go from "you owe us many thousands of dollars, you scum" to "we owe you money".

Regarding the rebate, as DevilsAdvocate corrected beagle, you do not have to have filed by yesterday to receive the rebate. Looking over the IRS's webpages on this, they don't make that clear until deeper into the information and so it's not entirely obvious. Nevertheless, they do eventually tell you that you only have to file by October 15th to get it...and you do not have to file an extension, either.

Also, for anyone else out there like me, who's on social security (retirement or disability) or a few other similar things, you don't have to have work income to get this rebate. If your income is social security and at least $3,000, you qualify for it. You can file free online for it at several places. It's easy, I did on Monday.
posted by Dances with Werewolves at 12:32 AM on April 16