What happens when you fail to file your tax returns?
Every year the IRS receives W-2s and 1099s representing wages and other incomes which you have received. The IRS can use these income amounts to prepare a Substitute for Return.
If you are single, receive a W-2, use a use a Standard Deduction and have no Capital Gains then the Substitute for Return might agree with the return you should have filed. However…
If you have kids, if you would itemize your deductions, if you have sold property or stocks, your return will show you owing substantially more than you should.
To explain…If you sold your home and don’t file your tax returns, the IRS will count the sales price as Net Income! There will be no cost basis or exemption.
