What happens if you don’t file taxes on time?

What happens if you don’t file taxes on time?

04.15.2024

Tax Day, or the deadline for filing your 2023 federal income tax return, falls on April 15, 2024.

But what happens if you are late filing taxes?

Read more: Tax 101: Understanding the basics

Can you file for a tax extension?

If you think there’s a chance that you might miss the tax-filing deadline, you should consider filing for a deadline extension.

This will automatically give you until October 15, 2024, to file your taxes. However, you must file an extension before April 15. If you wait until after this date, it will be too late to receive an extension.

To file for an extension, complete IRS Form 4868, an application for an automatic extension. Note that while filing for an extension will give you more time to file your federal tax return, it does not give you more time to pay your taxes if payments are due. If you think you might owe taxes this year instead of receiving a refund, you should estimate how much you’ll owe and send this amount in with Form 4868.

What happens if you don’t file taxes on time?

If you miss the tax-filing deadline and are due a tax refund this year, then there will be no penalty associated with filing late — even if you don’t file for an extension. Your only “penalty” would be a delay in receiving your refund. You have up to three years from the tax-filing deadline to file your return and receive your refund.

But it’s a different story if you owe taxes and miss the tax-filing deadline. In this scenario, you will be assessed penalties for failing to file your return on time and failing to pay your taxes on time. If a return is over 60 days late, the minimum penalty for failure to file penalty is 5% of the unpaid tax per month or part of a month, plus interest, with a maximum penalty of 25% of the unpaid tax.

The penalty for filing taxes late is 0.5% per month (or a fraction thereof) of the unpaid tax until the tax is paid in full, plus interest, also with a maximum penalty of 25%. The IRS can collect back taxes for ten years from the date the taxes were assessed.

Why you should file a past-due tax return ASAP

If you were supposed to file a tax return but didn’t do so, you should go ahead and file this return as soon as possible instead of waiting. Here are the top reasons for doing so:

1. To claim your tax refund

If you are owed a refund, you won’t receive it until you file the tax return corresponding to the tax year the refund is owed. The IRS holds onto tax refunds if its records show that one or more returns is past due until it receives the return or an acceptable excuse for why the return won’t be filed.

2. To protect your Social Security benefits

This applies mainly to self-employed individuals. If you’re self-employed and don’t file a tax return, your self-employment income won’t be reported to the IRS. This means you won’t receive credits for this income toward your Social Security retirement and disability benefits.

3. To avoid penalties and interest

The penalty for failing to file a tax return is 5% of the unpaid tax per month, plus interest, with a maximum penalty of 25% of the unpaid tax. And the penalty for filing a tax return late is 0.5% per month (or a fraction thereof) of the unpaid tax until the tax is paid in full, plus interest, also with a maximum penalty of 25%.

4. To avoid loan approval delays

When you apply for a home mortgage, business loan or federal higher education aid, you will have to submit a copy of your income tax return along with your loan application. So failing to file a return could delay your loan approval.

What if you can’t pay?

You have three main options if you can’t afford to pay the amount of tax you owe now:

1. Pay it using a credit card.

The IRS accepts credit cards as payment for taxes due. Keep in mind, however, that if you can’t pay your credit card balance in full when the bill’s due date comes, you could end up paying high interest rates that significantly increase the amount that you end up paying.

2. Pay it in installments.

You’ll attach IRS Form 9465 to your tax return to request an installment agreement and monthly payment plan for the payment of your taxes. If you owe more than $10,000, the IRS may want to review your personal finances (such as your assets, liabilities and cash flow) before agreeing to a payment plan.

The IRS will charge fees and interest to set up payment plans.1

3. Ask for an “offer in compromise.”

In certain situations, the IRS will accept less than the full amount of tax due. This is referred to as an offer in compromise. These situations include:

  • If there’s doubt that the amount due is accurate
  • If there’s doubt that the tax could ever be paid in full
  • If the IRS determines that payment would result in economic hardship or be unfair

Request Form 656 to learn more about offers in compromise.

What if you didn’t ask for an extension?

If you don’t file your tax return on time and don’t ask for an extension, the consequences will depend on whether you’re getting a refund or owe money to the IRS. If you’re getting a refund, there are no consequences to filing your federal return late and not asking for an extension (the same might not be true for state taxes).

But if you owe the IRS money and don’t ask for an extension, you will be subject to a late filing penalty of 5% of the unpaid tax per month, plus interest, up to a maximum of 25%.

And remember that if you fail to file a tax return indefinitely, there is no statute of limitations on how far back the IRS can go to collect past-due taxes.

What are the 2023 tax brackets?

Here are the federal income tax brackets for tax year 2023 that apply to tax returns filed in 2024.

Tax rate

Single filers

Married filing jointly

Married filing separately

Head of household

10%

$0 to $11,000

$0 to $22,000

$0 to $11,000

$0 to $15,700

12%

$11,001 to $44,725

$22,001 to $89,450

$11,001 to $44,725

$15,701 to $59,850

22%

$44,726 to $95,375

$89,451 to $190,750

$44,726 to $95,375

$59,851 to $95,350

24%

$95,376 to $182,100

$190,751 to $364,200

$95,376 to $182,100

$95,351 to $182,100

32%

$182,101 to $231,250

$364,201 to $462,500

$182,101 to $231,250

$182,101 to $231,250

35%

$231,251 to $578,125

$462,501 to $693,750

$231,251 to $346,875

$231,251 to $578,100

37%

$578,126 or more

$693,751 or more

$346,876 or more

$578,101 or more

Get the scoop on your money.

Stay current on planning, saving, and investing for life.

1 IRS, “Additional Information on Payment Plans,” December 2023.

RO3413596-0524

The Currency editors

Staff contributors

The CurrencyTM, a publication from Empower, covers the latest financial news and views shaping how we live, work, and play. We keep you current on ways to plan, save, and invest for life.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. No part of this blog, nor the links contained therein is a solicitation or offer to sell securities. Compensation for freelance contributions not to exceed $1,250. Third-party data is obtained from sources believed to be reliable; however, Empower cannot guarantee the accuracy, timeliness, completeness or fitness of this data for any particular purpose. Third-party links are provided solely as a convenience and do not imply an affiliation, endorsement or approval by Empower of the contents on such third-party websites.

Certain sections of this blog may contain forward-looking statements that are based on our reasonable expectations, estimates, projections and assumptions. Past performance is not a guarantee of future return, nor is it indicative of future performance. Investing involves risk. The value of your investment will fluctuate and you may lose money.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.