Tax time can be intimidating and stressful, not only for young adults who are new to the system, but for everyone, especially those who owe money.
One of the most important things to keep in mind when filing your income taxes is the deadline. There are a number of reasons why individuals may miss the tax deadline, such as opting not to file their taxes, being unaware of the deadline, or fear of not being able to pay their balance owing.
No matter the situation, you should always file your taxes, and you should always file them on time; there are usually workable solutions to the problems you may be worried about. The problems you worry about will only worsen if you file your taxes late, or skip filing them all together.
For our Canadian friends, what happens when you miss the tax deadline will vary with circumstance, but will always incur some type of penalty.
For individuals, the deadline for submitting your income tax return is typically April 30th.
If You Are Getting a Refund
If you are supposed to receive a tax refund and you submit your taxes late or do not submit your taxes, you will not incur any penalties. You simply will not receive your refund.
If You Owe
You may be penalized with fees beginning when you submit your taxes late, or do not submit them at all, when you have a balance owing, meaning you are supposed to pay additional tax money to the CRA.
If this is your first late submission within the last few years, your penalties will be quite minor. They will equate to 5 percent of your current balance owing, and an additional 1 percent for every month your return is late.
If your return has been late in any of the previous 3 tax years, the CRA will increase your penalties for the current tax year. This can include an increase from 5 percent to 10 percent of your current balance owing, and 2 percent every additional late month.
If you repeatedly fail to file your tax return or refuse to pay your balance owing, the CRA can go one step past penalties, and can begin an investigation. This can result in an audit, where they will take a further look into your financial situation and whether or not you have been honest and accurate in your declaration of income, taxes, etc. In some cases, this may lead to the CRA taking you to court for taxes owed.
What happens when you miss the tax deadline will vary from person to person, as each individual’s situation will dictate the penalties incurred and the course of action the CRA chooses to take. To avoid any unnecessary costs and troubles, it is best to ensure you are aware of the tax deadlines, and to file your taxes in a timely manner every year.