What Happens When You File Taxes Late?

The tax season has officially ended, and taxpayers that haven’t filed their tax returns are on the verge of paying late filing penalties. However, not everyone pays them. If you’re wondering what happens when you file your federal income tax return late, there are multiple answers to it. 

This article will go over everything you need to know about the IRS penalties and what to expect for filing taxes late.

Failure to file penalties

The Internal Revenue Service has a penalty for taxpayers that haven’t filed their federal income tax return if they didn’t satisfy their debt by the April 18 deadline. For future years, the deadline can be April 15 but for 2023 taxes that you were supposed to file a tax return in 2024, the last day to file was April 18.

If you don’t owe any taxes, filing late doesn’t really have any consequences. Still, you won’t get your refund unless you prepare and file your return with the Internal Revenue Service. This is the only outcome taxpayers face when filing taxes later than the deadline. That said, if you want to get your tax refund as soon as possible, make sure to file as early as you can.

If you owe taxes

Taxpayers that owe taxes and haven’t filed their return by the deadline pay a penalty of 0.5 percent for each month the taxes aren’t paid. The penalty accumulates over time and can be up to 25 percent of the taxes unpaid. So, the later you pay taxes on the tax return that you haven’t filed, the more you pay in penalties.

Additionally, you may also be subject to underpayment penalties. This extra penalty occurs if you didn’t pay 90 percent or more of your tax liability during the tax year.

Of course, you won’t know how much you owe to the Internal Revenue Service until you file your refund. Because of this, filing is the only sensible way to figure out how much you owe in taxes and pay them accordingly.

What if you don’t owe taxes and never file?

Since there are no penalties for late filing if you don’t owe taxes, you can go on for a few years without filing a tax return. Yet, that isn’t recommended for several reasons. For one, you won’t get your tax refund until you file the tax return and tell the IRS here is how much I paid during the tax year and the excess amount I paid. 

Another reason is despite having paid an excess amount – cause that is what happens pretty much the whole time – you will never get your tax refund after three years of not filing. 

For example, if you haven’t filed your 2023 tax return and intend to file it this year, you won’t get your tax refund because it’s been more than three years. The same goes for amending a tax return. If you haven’t filed it within three years after filing the original tax return, you won’t be able to amend the return. It simply goes away with time.

Filing an extension is always an option

Filing a tax extension for your taxes is the only way to get more time from the Internal Revenue Service to file your federal income tax return. If you owe taxes, you can file an extension automatically through the IRS Direct Pay by paying taxes and requesting the extension at the same time. This is the most convenient and time-efficient way to go about it.

By filing a tax extension, you will get about six more months to file your federal income tax return, pushing the deadline to October 15. This gives you more time to gather the documents to file your tax return.

If you’re an employee working for an employer that hasn’t filed taxes because you didn’t receive your W-2 from your employer yet, you can utilize Form 4852 as a substitute for the Wage and Tax Statement. Learn more about Form 4852 for the 2024 tax season here.