If you owe taxes and didn't file your federal income tax return by the tax deadline, there may be consequences in the form of IRS penalties and interest. The caveat is that not everyone is required to file taxes.
» MORE: How much do you have to make to file taxes
What happens if you don't file taxes?
You may face the failure-to-file penalty
If you owe taxes and you didn't file, or filed late, the IRS may apply a penalty known as the late-filing penalty or the failure-to-file penalty. The penalty is usually 5% of the tax owed for each month or part of a month the return is late, up to 25% of your bill.
If your return is more than 60 days late, the minimum penalty for not filing taxes is $485 or the entire amount of tax owed, whichever is smaller. The late-filing penalty maxes out after five months of your return being late, but other penalties and interest may continue to accrue.
You may also face another penalty
The late-filing penalty affects people who owe taxes and don’t turn in their Form 1040 and other important tax documents on time. The late-payment penalty, on the other hand, is a separate fee that's issued if you fail to pay your tax bill by the tax deadline. If you owe taxes and don't file or pay on time, both the late-filing penalty and the late-payment penalty will be issued.
The penalty for failing to pay your taxes on time is 0.5% of your unpaid bill for each month your outstanding taxes are unpaid, up to 25% of your outstanding bill plus interest.
If both the failure-to-file and the failure-to-pay penalties are issued in the same month, the late-filing penalty is reduced by the amount of the late-payment penalty for that month, so you'd pay a combined fee of 5% for each month (or partial month) your return is late.
If you missed the tax deadline, the IRS recommends you file and pay as soon as possible. Doing so can reduce any fees and interest you'll pay on your tax bill.
» MORE: How to set up a payment plan with the IRS
🤓Nerdy Tip
Some late filers may be eligible for tax relief in the form of a penalty abatement if they meet certain conditions. For example, you might be eligible for penalty relief if you have a reasonable explanation for filing late or if this is your first time missing the deadline. The IRS has more information on how to apply for penalty relief on its website.
What happens if you file taxes late but don't owe anything?
There is usually no failure-to-file penalty if your late tax return results in a refund. But if you have a filing obligation, you should still plan to file as soon as possible to recoup your funds.
Keep in mind that you also typically have just three years to claim any tax refunds due to you. This means that if you didn't file in 2020 but think you were due a refund, you only have until May 17, 2024, to file a tax return for that year and claim your refund. The IRS estimates that over $1 billion worth of funds are due back to nonfilers from 2020.
» MORE: Hit with a tax penalty for the first time? The IRS might give you a do-over
Simple tax filing with a $50 flat fee for every scenario
With NerdWallet Taxes powered by Column Tax, registered NerdWallet members pay one fee, regardless of your tax situation. Plus, you'll get free support from tax experts. Sign up for access today.
for a NerdWallet account
Hassle-free tax filing* is $50 for all tax situations — no hidden costs or fees.
Maximum refund guaranteed
Get every dollar you deserve* when you file with this tax product, powered by Column Tax.
Faster filing
File up to 2x faster than traditional options.* Get your refund, and get on with your life.
*guaranteed by Column Tax
How to avoid a penalty for filing taxes late
A tax extension can get you an extra six months to finish your tax return, but the deadline to request an extension was April 15.
If you did get an extension, remember that it only gives you more time to file your tax return. It does not give you more time to pay your taxes. You are still required to submit an estimated tax payment by April 15. Otherwise, anything you owe past the tax deadline might be subject to that late-payment penalty and interest.
Some people, such as victims of natural disasters, certain members of the military or Americans living overseas, may automatically get more time to file. Remember to keep your eye on the calendar for the Oct. 15 extension deadline, though — if you miss it, that failure-to-file penalty could come back to haunt you.
Simple tax filing with a $50 flat fee for every scenario
With NerdWallet Taxes powered by Column Tax, registered NerdWallet members pay one fee, regardless of your tax situation. Plus, you'll get free support from tax experts. Sign up for access today.
for a NerdWallet account
How long can you go without filing taxes?
While the government usually has just six years to charge you with criminal tax evasion, it has forever to collect the taxes you owe and assess penalties. In addition to the failure-to-file and late-payment penalties, these things could happen to you when the IRS catches up:
Interest: On top of penalties, interest accrues on your unpaid taxes.
A substitute return: If you fail to file but the IRS has some information needed to calculate your taxes, such as your W-2 form, you may be notified by mail that it has filed a return on your behalf. It won’t consider the tax credits, deductions or other tax breaks you may have taken if you’d done your taxes.
Lost refunds: You may be missing out on money you’re owed. In most cases, you get a three-year window to file previous years’ returns. Once this window closes, you forfeit your tax refund.
» MORE: How to file back taxes
Pandemic-related penalty relief
On Dec. 19, 2023, the IRS announced its decision to grant approximately $1 billion in penalty relief for certain 2020-2021 tax bills. The agency’s reversal of penalties stems from its 2022 decision to temporarily suspend the mailing of collection notices, which would have reminded taxpayers of outstanding bills and penalties.
The relief, which was implemented automatically, applies to taxpayers with bills totaling less than $100,000. If the taxpayer who received the penalty relief has already paid the penalty, the agency will refund the penalty amount or credit it toward an existing tax bill if one exists. You can learn more about the penalty relief on the IRS website.
