A tax return is an annual federal financial report that assembles and reports tax payments, tax deductions, credits, and income received for money earned during the prior calendar year (or tax year).
Preparing your tax return can range from incredibly simple with a Form 1040 only listing your income, standard deduction, and pertinent personal information to extremely complicated with the need for hiring a tax professional.
This is especially the case if you have self-employment or freelance business income, make contributions to an IRA, or seek to add additional schedules for reporting more complex passive income investments or tax positions.
If you still aren’t convinced filing a return is the right move, I’ll really need to lean in and hammer home the fear because not filing a return will get costly and fast.
First things first. You’re going to get hit with penalties and interest. If you didn’t expect that right off the bat, you don’t know the federal government. These disincentives usually are enough to entice most to file a return without a fight.
Penalties are the worst. They’re not any better coming from the federal government. For failing to file a return (when you are technically required to do so), they slap you with a late-filing penalty worth 5% of the tax owed per month in most circumstances.