Two Tracks: General Or Limited
Where the taxes payable do not involve GST/HST wash transactions, an applicant who applies for the Voluntary Disclosure Program is processed either in a general or limited program. Which track the applicant enters depends on a number of factors, the most salient being whether the applicant acted out of intentional misconduct or whether it was an error.
Other factors that determine which track an applicant is processed include:
- the dollar amount involved
- the number of years of non-compliance
- the sophistication of the taxpayer/applicant and
- whether efforts were made to avoid detection through the use of offshore vehicles and other means
The differences between the limited and general tracks relate to the extent of relief in the penalties and interest that may be forthcoming. However, as mentioned earlier, there can be no relief provided in the amount of taxes that must be paid as far as the principal tax owed.
General Program
For those whose misconduct was the result of an error, he/she may enjoy relief from all penalties, referral for prosecution, and partial interest for the years preceding the three most recent years of returns. *Generally speaking, interest relief for the years preceding the three most recent years of returns is 50% of the interest applied for those years.
Limited Program
Please see table below for the differences in the consequences related to the Limited and General Tracks:
When To Deduct Property Taxes
You must write off property taxes in the year that the taxes are actually paid. In addition, the taxes must actually be levied on you. For example, if you receive a tax bill on December 1, 2017 that is due by January 31, 2018, you can deduct it in 2017 if you pay it prior to the end of the year. If you pay it in January 2018, you deduct it on your 2018 tax return.
Can I File My 2017 Taxes In 2020
Be aware that you can only claim your tax refund for a previous tax year within three years of the original tax returns due date or deadline. For example, you have until April 15, 2024 to claim a 2020 Tax Refund, April 15, 2023 to claim 2019 Tax Refund, for 2018 until April 15, 2022, and 2017 until April 15, 2021.
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Keep An Eye On Your Income
You need to file a tax return if you meet or surpass certain levels of income during the year. If youre employed, look at your pay stub for the year to date incomeand if you have more than one job, be sure to add up your income from all your employers. Remember to include income from other sources, too, such as money you make on rental property, anything you sell, investments or interest.
How To File Your Taxes In 5 Simple Steps
7 Minute Read | November 10, 2021
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What Happens If You Dont File Your Taxes In Canada
If you are required to file a tax return, you must do so by law. It isnt a crime to owe tax debt, but it is a crime to not file taxes if you are required to do so. Most Canadians are required to file income taxes every year.
Not filing a tax return = tax evasion = crime.
Each day that you are behind filing your returns, you could be considered to essentially be committing tax evasion. Tax evasion is a situation where an individual or a business intentionally ignores Canadian tax law. By not filing income taxes when they are due, you are ignoring Canadian tax law and the Canada Revenue Agency could consider this to be an intentional attempt to evade taxes. There are significant penalties for tax evasion, including fingerprinting, court-imposed fines, prison time, and a possible criminal record. This can damage your reputation and your future.
As mentioned, it is not against the law to have a tax debt and owe money to the CRA . It is against the law to not file your tax returns.
Even if the CRA does not seek tax evasion charges against you, there are still possible ways that you can be hurt by filing taxes late in Canada. The CRA can charge significant late-filing penalties as well as interest charges on the tax debt that you owe. The longer you wait and the longer your late tax filing is outstanding, the more you will accrue large penalties and interest. You could even be subject to prosecution.
Sole Proprietor Filing Requirements
If you are the sole owner of an LLC, the IRS will recognize your business as a sole proprietorship for tax purposes. You will fill out your personal income taxes as if you were the business, including profits earned and expenses that need to be deducted. You will need to fill out this information using Schedule C as a self-employed individual.
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Documents For Tax Credits And Deductions
Tax deductions and tax credits reduce the amount of income tax you owe for the year . You may need to gather additional tax documents to claim specific types of credits and deductions. For example, you probably need to have a copy of Form 1098-T if you want to deduct college tuition with the lifetime learning credit.
Even if credits and deductions were changed or eliminated for future years, you can claim them if they were available for the tax return youâre claiming. Learn more about the difference between tax credits and deductions as well as the difference between different types of deductions.
Common documents you may need include:
-
Receipts from charitable donations for the charitable contributions deduction
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Receipts for unreimbursed employee expenses, such as for travel or union dues
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Moving expenses if you moved for a job
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Documents showing the value of any casualty and theft losses, not including losses already covered by your homeowners insurance policy
Seeking Help For Taxes
The biggest issue youll face in filing past tax returns is the changing laws. This is especially true since the Tax Cuts and Jobs Act, which made dramatic changes to the way taxes are calculated for each person. You may find youre having a hard time matching the various tax laws as you try to complete forms from one year to the next.
For instance, in one year, you can take personal exemptions and the next you cant, but the standard deduction increased to compensate for it. That change will make those two tax returns dramatically different.
A professional tax preparer may be the easiest option as you try to get updated on your tax filings. Professionals follow the tax law changes closely and have the resources on hand to easily differentiate between years. If you choose to go the software route, youll need to invest in packages for each tax year and plug the information into each separately, which can get pricey and can be time-consuming. Be aware that you may not be able to e-file your return if too many years have elapsed.
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Request Tax Documents From The Irs
Finding documents from previous years may be challenging for some. Thankfully, the IRS has a form you can fill out to request any tax information they have on file for you for a given year. Form 4506-T allows you to request a transcript of your tax return information, even if you haven’t filed a tax return. You can request information from the last 10 tax years.
The IRS will send the information it has on record, including information found on forms such as W-2s, 1099s, and 1098s. It won’t have information about deductions and credits you may qualify for, though, so you’ll still need to do some work on your own.
Mailing Address For Back Taxes
| Your residence |
|---|
Kansas City, MO 64999-0002 | Internal Revenue Service
P.O. Box 1214
Charlotte, NC 28201-1214 || Alaska, California, Hawaii, Washington | Department of the Treasury
Internal Revenue Service
Fresno, CA 93888-0002 | Internal Revenue Service
P.O. Box 7704
San Francisco, CA 94120-7704 || Arizona, Colorado, Idaho, Kansas, Montana, Nebraska, Nevada, New Mexico, Oregon, North Dakota, South Dakota, Utah, Wyoming | Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0002 | Internal Revenue Service
P.O. Box 802501
Cincinnati, OH 45280-2501 || Connecticut, District of Columbia, Maryland, Rhode Island, West Virginia | Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0002 | Internal Revenue Service
P.O. Box 931000
Louisville, KY 40293-1000 || Delaware, Maine, Massachusetts, New Hampshire, New York, Vermont | Department of the Treasury
Internal Revenue Service
Kansas City, MO 64999-0002 | Internal Revenue Service
P.O. Box 37008
Hartford, CT 06176-7008 || Florida, Louisiana, Mississippi, Texas | Department of the Treasury
Internal Revenue Service
Austin, TX 73301-0002 | Internal Revenue Service
P.O. Box 1214
Charlotte, NC 28201-1214 || Illinois, Michigan, Minnesota, Ohio, Wisconsin | Department of the Treasury
Internal Revenue Service
Fresno, CA 93888-0002 | Internal Revenue Service
P.O. Box 802501
Cincinnati, OH 45280-2501 || Pennsylvania | Department of the Treasury
Internal Revenue Service
Ogden, UT 84201-0002 | Internal Revenue Service
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If You Need Help With Your Return
If you are unable to get help filling out your North Carolina return, you can contact a service center for assistance or call toll-free at 1-877-252-3052. Your federal return must be completed before we can assist you in filling out your North Carolina return.
If you are disabled, have a low income, or are a senior citizen, income tax returns can be prepared free of charge through the Volunteer Income Tax Assistance or the Tax Counseling for the Elderly programs. For location and dates of assistance call the Internal Revenue Service toll-free at 1-800-829-1040.
How Many Years Back Can I Get A Tax Refund In Canada
If you do not owe money on your tax return, you will not pay a penalty for filing late. However, it is still strongly recommended that you file. Not only is it a legal requirement, but the CRA will hold onto any refund that you are expecting until you file. This means you will be giving up money that should otherwise be yours. If youre filing late taxes Canada benefits may not be delivered either, since the amounts of these benefits often depend on the numbers in your tax returns.
You have ten years to file a return and still claim your tax refund. After this time, the CRA may not give you the money that you are owed.
No matter what your tax situation may be, it makes sense to file as soon as possible. Some people may believe that its better to ignore your taxes and that the CRA will not notice. While the agency may not say anything right away , that doesnt mean they wont eventually find out. The CRA is a very large and powerful agency. It will recognize that you have not filed your tax returns on time and the longer you go without filing, the more potential trouble you could find yourself in.
If you have not filed a return that should have been filed, the CRA may consider your situation to be tax evasion. This means that the agency could seek criminal charges against you. If you are found guilty of tax evasion, you will still be required to pay the tax debt you owe and you could potentially be fined up to 200% of the taxes evaded. You could even face jail time.
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There’s No Time Limit On The Collection Of Taxes
If you have old, unfiled tax returns, it may be tempting to believe that the IRS or state tax agency has forgotten about you. However, you may still be on the hook 10 or 20 years later.
There is generally a 10-year time limit on collecting taxes, penalties, and interest for each year you did not file. However, if you do not file taxes, the period of limitations on collections does not begin to run until the IRS makes a deficiency assessment.
State tax agencies have their own rule and many have more time to collect. For example, California can collect state taxes up to 20 years after the assessment date.
Understand How Your Taxes Are Determined
The government decides how much tax you owe by dividing your taxable income into chunks also known as tax brackets and each chunk gets taxed at the corresponding tax rate. The beauty of this is that no matter which bracket youre in, you wont pay that tax rate on your entire income.
The progressive tax system in the United States means that people with higher taxable incomes are subject to higher federal income tax rates, and people with lower taxable incomes are subject to lower federal income tax rates.
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Pay Social Security Taxes To Qualify For Benefits
Self-employed individuals have to pay Social Security taxes through their estimated tax payments and individual income tax returns. By filing a return and paying the associated taxes, you report your income so that you may qualify for Social Security retirement and disability benefits when you need them.
Tax Deadline In Canada
For most Canadians, the deadline to file federal tax returns is April 30th. By this date each year, you must file your returns for the previous year . If this date falls on a Saturday, a Sunday, or a public holiday recognized by the CRA, individual returns will be considered on time if they are filed the next business day. If you have a balance owing, the CRA will charge compound daily interest on any unpaid amounts starting on May 1st. This means that if you owe a tax debt, its a good idea to pay it as soon as you possibly can. Otherwise interest charges will start to quickly add up.
Individuals who are self-employed have until June 15th to file their returns. However, if you have a balance owing, it still must be paid by April 30th to avoid interest payments.
Final tax returns must be filed for deceased persons as well. The deadline to file these returns is the normal filing deadline of April 30th or six months after the date of death, whichever is later. For example, if a person dies on October 1st, six months from that date would be April 1st. Since April 30th is later, the return would be due on April 30th. However, if the person died on November 15th, six months from that date would be May 15th, which is later than April 30th and thus the return would be due on May 15th. If a person died on January 30th, 2020, their 2019 tax return would be due on July 30th, 2020 but a 2020 tax return would also be due on the regular 2020 due date .
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Paying Debts And Collecting Tax Refunds
Paying any tax due on each completed return is relatively simple. The IRS wants your money, so it doesnt make the process challenging. You can go to its Direct Pay website to pay by electronic debit from your checking or savings account, and the IRS accepts credit card payments on its website, as well.
Keep in mind that there are time limits for refunds, audits, and debt collection. In most cases, your refund “expires three years from the date your tax return was due. But if you owe other tax debtsbecause you have a balance due from another year, for exampleyour refund will typically be applied to offset that debt.
Create a plan for paying off your tax debts if it turns out that you owe the IRS money. You might also want to plan on how to protect yourself from an IRS investigation, assessment, federal tax lien, or possibly a levy. You may have a few options, such as setting up an installment agreement with the IRS for a monthly payment plan or asking for an offer in compromise.
The IRS can and will impose penalties and interest on tax liabilities that aren’t paid in full by the deadline for the tax return.
How To File Your Return
For accurate and efficient processing, the Department strongly recommends taxpayers use an electronic eFile option to file their returns.
For taxpayers filing using paper forms, you should send us…
- Your North Carolina income tax return .
- Federal forms W-2 and 1099 showing the amount of North Carolina tax withheld as reported on Form D-400, Line 20.
- Federal Form 1099-R if you claimed a Bailey retirement deduction on Form D-400 Schedule S, Line 21.
- Form D-400 Schedule S if you added items to federal adjusted gross income on Form D-400, Line 7, or you deducted items from federal adjusted gross income on Form D-400, Line 9.
- Form D-400 Schedule A if you deducted N.C. itemized deductions on Form D-400, Line 11.
- Form D-400 Schedule PN if you entered a taxable percentage on Form D-400, Line 13.
- Form D-400 Schedule PN-1 if you entered an amount on Form D-400 Schedule PN, Part B, Line 17e or Line 19h.
- Form D-400TC and, if applicable, Form NC-478 and Form NC-Rehab if you claimed a tax credit on Form D-400, Line 16.
- A copy of the tax return you filed in another state or country if you claimed a tax credit for tax paid to another state or country on Form D-400TC, Line 7a.
- A copy of your federal tax return unless your federal return reflects a North Carolina address.
- Other required North Carolina forms or supporting schedules.
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