Filing taxes can be stressful, and it’s easy to find yourself pushing it off until the last minute. But what happens when you miss the deadline altogether? If you think you can just deal with it later without consequences, think again!
Failing to file on time can lead to hefty penalties, interest, and even long-term financial trouble. In this post, we’ll explore exactly what happens when you file your taxes late, and why putting it off might cost you more than you think.
Penalties for Late Filing
When you miss the tax filing deadline, the IRS imposes a Failure to File Penalty that can add up quickly. Typically, the penalty is 5% of the unpaid taxes for each month or part of a month that your return is late, up to 25% of your unpaid taxes. The longer you delay, the higher the penalty grows, making filing your return as soon as possible essential.
The penalty accumulates the day after the filing deadline and can result in substantial extra costs, especially if you owe a significant tax amount.
Penalties for Late Payment
Filing your taxes late is one thing, but failing to pay the amount you owe on time comes with its own penalties. The IRS charges a Failure to Pay Penalty of 0.5% of your unpaid taxes for each month or part of a month that the taxes remain unpaid, up to 25% of the total amount owed. While this penalty is smaller than the filing penalty, it still adds up over time, especially when combined with accumulating interest on your unpaid balance.
Interest on unpaid taxes starts accumulating from the day after the payment deadline, increasing the amount you owe.
What If You're Owed a Refund?
If you’re expecting a refund, the good news is that there’s generally no penalty for filing your tax return late. The IRS does not charge a Failure to File Penalty or Failure to Pay Penalty if you’re owed money. However, delaying your filing could still cause complications. You have a limited time—usually three years from the original filing deadline—to claim your refund. After that window closes, you forfeit your right to the refund altogether.
What Is the Consequence of Not Filing Taxes At All?
If you don’t file taxes at all, the IRS may take action by filing a substitute return on your behalf using only the information they have, which typically doesn’t include deductions or credits you may be entitled to. This could result in a higher tax bill than if you had filed yourself.
Additionally, you could face:
- Increased penalties: The Failure to File Penalty can escalate if you don’t file for an extended period. It can be up to 25% of your unpaid taxes.
- IRS enforcement actions: The IRS can issue tax liens or levies on your assets, including wage garnishments or seizing your bank accounts.
- Potential criminal charges: Although rare, failing to file for several years could lead to criminal prosecution for tax evasion in extreme cases.
What If You Can’t File Your Taxes on Time?
If you can’t file your taxes by the April 15 deadline, you can request an extension by submitting Form 4868 to the IRS. This gives you an additional six months, extending your deadline to October 15. Filing for an extension helps you avoid the Failure to File Penalty, which can quickly add up.
However, remember that an extension only provides extra time to file your return — not to pay any taxes owed. You are still required to estimate and pay any taxes by the original April deadline. If you don’t, interest and late payment penalties will accrue on the unpaid amount, so it’s best to pay as much as possible to reduce the charges.
What Happens if You File Your Taxes Late but Don’t Owe Anything?
If you file your taxes late but don’t owe anything, the IRS typically won’t impose penalties since there’s no unpaid balance. However, delaying your filing could still have consequences, such as missing out on your refund. You have three years from the original filing deadline to claim a refund—after that, the IRS keeps the money.
Take Action to Avoid Late Filing Penalties
To avoid penalties, filing your taxes on time or requesting an extension if you need more time to prepare your return is crucial. Even if you can’t pay the full amount owed, filing on time will help you avoid additional fees. Remember to pay as much as possible by the original deadline to reduce interest and penalties.
If you need help managing your taxes or navigating complex deadlines, contact TaxShield Service. Our team of tax professionals is ready to assist you with filing, extensions, and resolving any tax issues.
Call 844-503-0401 for personalized support and guidance.
