Filing taxes every year is a legal requirement for most people in the United States. However, some taxpayers may wonder if it’s possible to skip filing taxes for a year if certain conditions are met. While the reasons for wanting to skip filing may vary, it’s important to understand the rules and risks associated with not filing taxes.
What are the filing requirements?
In general, the IRS requires all Americans to file an income tax return each year if they meet the filing requirements for that tax year. Some of the most common filing requirements include:
- Your gross income exceeds the standard deduction – For 2022, the standard deduction is $12,950 for single filers and $25,900 for married couples filing jointly.
- You are self-employed as a freelancer or contractor.
- You sold stocks, bonds, or other investments during the year.
- You have at least $400 in self-employment income.
There are some instances where you may not have to file, such as if you are below the income limits to require filing. But in most cases, if the above criteria apply, you need to file no matter what.
What are the risks of not filing?
While it may be tempting to skip filing your tax return some years, especially if you think you’ll owe money, not filing can lead to serious risks and consequences down the road. If you are required to file and don’t, some potential penalties include:
- IRS failure to file penalty – The penalty amount is typically 5% of the unpaid taxes for each month the return is late, up to 25% of your total tax liability.
- IRS failure to pay penalty – If you also fail to pay the taxes you owe by the deadline, this penalty is 0.5% of the unpaid tax each month, up to 25% over time.
- Loss of refund – By not filing, you lose out on any potential tax refund you were entitled to.
- IRS may file for you – The IRS can file a return for you based on the information they have, which could result in errors and additional penalties.
- Additional IRS scrutiny – By not filing, your risk of getting audited goes up significantly.
- Difficulty getting loans/credits – Lenders and credit agencies may view you as higher risk, making it harder to get approved.
In addition to penalties, the IRS charges interest on any taxes owed, so your liability grows exponentially the longer you wait to file and pay.
Can you ever skip filing legally?
There are a few rare cases where you may not have to file a tax return for one year legally:
- No income – If you truly had $0 income for the entire tax year, were not self-employed, and do not otherwise meet requirements, you may not have to file.
- Income below filing minimum – If your gross income was below the standard deduction threshold and you don’t have special circumstances, you can skip filing.
- Extensions – Taxpayers can file for a 6-month extension, giving them until October 15 before their return is considered late.
- Leave of absence – If you received permission from the IRS for a leave of absence for things like education, foreign residency, or illness, you may have up to 12 months before penalties would apply.
Outside of very limited cases like these, skipping filing taxes for a whole year is not advisable or allowed without consequences. Some taxpayers may still try to rationalize not filing, but this often creates bigger issues.
Why do some taxpayers consider skipping filing?
There are a few common reasons why some taxpayers consider not filing their returns, even knowing the risks:
- Owe money – Many filers want to skip filing if they know they will have a balance due and struggle to pay. But penalties and interest make this more expensive.
- Hate paperwork – Filing taxes can be a tedious process. But e-filing and working with an accountant can simplify it.
- Years without filing – Once a taxpayer gets behind on filing, it can seem too hard to catch up. But filing is key to getting right with the IRS.
- Fear of audit – Some worry filing returns may increase audit risk, but not filing all but guarantees IRS scrutiny.
- Protesting taxes – Though rare, some see not filing as a way to protest tax law. But skipping filing can compound issues.
At the end of the day, it almost always makes sense to file on time, even if you owe. Communicating with the IRS preemptively can help avoid penalties and get you on a payment plan if needed.
When should you file late returns?
If you’ve fallen behind on filing taxes for one or more years, it’s important to take action to catch up. Some tips include:
- File ASAP – File any back returns as soon as possible, even if you can’t pay in full yet. This stops further penalties and interest.
- Look into IRS programs – The IRS offers programs like tax amnesty to help taxpayers file old returns and set up payment plans.
- Ask about penalty relief – Based on reasonable circumstances, you may qualify for a penalty waiver on late filings.
- Get help filing – An experienced tax pro can help get your back returns filed correctly and minimize penalties.
- Stay compliant going forward – Be sure to file on time every year once you’ve caught up to avoid future issues.
While frightening, cleaning up old unfiled returns is the only way to get right with the IRS and avoid legal action. An accountant can help make the process smoother.
The bottom line
Trying to skip filing federal income taxes for one year is generally not advisable or legal for anyone who meets filing requirements. While penalties or taxes owed may deter some filers, the risks of not filing almost always outweigh any temporary benefit. By communicating with tax authorities and getting on a payment plan if needed, most late filers can get caught up on their taxes without too much stress. In rare cases, you may have a valid reason to legally skip one year of filing, but proceed with extreme caution if going this route. Whenever in doubt, discuss your specific situation with a tax professional for guidance on the best approach.
Frequently Asked Questions
Can I skip filing taxes if I don’t owe money?
No, you still must file a tax return even if you do not owe any money. The filing requirements apply to all taxpayers based on income thresholds, employment status, and other criteria, regardless of taxes due.
What if I’m due a refund but don’t file?
If you are owed a tax refund but do not file, you forfeit your ability to collect that refund. Refunds cannot be claimed retroactively for past tax years if returns go unfiled.
Can I go to jail for not filing taxes?
It is rare to face jail time for failure to file, but criminal tax charges can be brought if IRS agents believe you intentionally avoided filing returns to commit tax fraud. Most late filers face financial penalties, interest, and loss of refunds.
How many years of taxes can I file at once?
There is no limit on how many past-due tax returns you can file at one time. However, the IRS typically only allows refunds on late returns going back 3 years. Returns more than 3 years late still must be filed even if no refund is due.
Can the IRS file taxes for me if I don’t file?
Yes, the IRS can file a tax return on your behalf based on income data they have from employers, banks, and other sources. However, this can result in mistakes, taxes owed, and penalties if you don’t file your own accurate return.