Can You File Late Taxes and What Happens If You Do?

It is possible to file taxes after the official deadline, but doing so often comes with financial implications. Understanding the potential penalties and the steps involved in submitting a late return can help mitigate negative outcomes.

Understanding Penalties and Interest

Filing or paying taxes late can result in various financial charges. Two primary penalties are the failure-to-file penalty and the failure-to-pay penalty.

The failure-to-file penalty is generally 5% of the unpaid taxes for each month or part of a month a tax return is late, with a maximum penalty of 25% of the unpaid tax. If a return is more than 60 days late, a minimum penalty may apply, which is the lesser of $485 (for 2024) or 100% of the tax owed. This penalty is significantly higher than the failure-to-pay penalty, emphasizing the importance of filing even if payment cannot be made immediately.

Conversely, the failure-to-pay penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. This penalty also has a maximum of 25% of the unpaid tax. If both penalties apply in the same month, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty, ensuring the combined penalty for that month does not exceed 5%. For example, a 5% combined penalty would consist of a 4.5% failure-to-file penalty and a 0.5% failure-to-pay penalty.

In addition to penalties, interest is charged on underpayments from the tax due date until the balance is paid in full. The IRS sets this interest rate quarterly, typically as the federal short-term rate plus three percentage points. This interest accrues daily on any unpaid balance, including on penalties and interest themselves. For instance, the interest rate for individuals on unpaid taxes was 7% for the first half of 2025.

Steps for Filing a Late Tax Return

Submitting a tax return after the original deadline involves several steps. The first action involves gathering all necessary financial documents for the relevant tax year. These typically include W-2 forms from employers, 1099 forms for various types of income, and records of any deductions or credits. Obtaining these documents might require contacting employers or financial institutions, or requesting transcripts from the IRS using Form 4506-T.

Once all financial information is collected, the next step is to accurately complete the appropriate tax forms for the past due year. This usually involves Form 1040 for individual income tax returns. Ensure all calculations are correct to avoid issues. Utilizing tax software or consulting a tax professional can help ensure the return is completed accurately and all eligible deductions and credits are claimed.

After completing the return, it can be submitted to the IRS either electronically or by mail. While e-filing is generally preferred for its speed and confirmation, prior-year returns may have limitations on electronic submission, often requiring them to be mailed. If mailing, send the return to the correct IRS processing center, which can be found on the IRS website or in the form instructions. Even if payment cannot be made in full, filing the return promptly is important to stop the accrual of the failure-to-file penalty.

Circumstances Affecting Your Late Filing

The consequences of filing a late tax return can vary significantly depending on whether a refund is due or taxes are owed.

If a taxpayer is due a refund, there is generally no failure-to-file penalty for submitting the return late. However, there is a time limit to claim a refund, typically three years from the original due date of the return. If the return is not filed within this three-year window, the right to claim the refund is forfeited, and any overpaid tax goes to the U.S. Treasury. Therefore, even if no penalty is assessed, filing a late return is necessary to recover any overpayments or eligible credits.

Conversely, if taxes are owed, both the failure-to-file and failure-to-pay penalties, along with interest, will likely apply. The failure-to-file penalty is often substantially higher than the failure-to-pay penalty, making it particularly important to file the return as soon as possible, even if the full tax amount cannot be paid. Paying as much of the owed tax as possible at the time of filing will help reduce the amount on which penalties and interest are calculated, thereby minimizing the overall financial burden.

Strategies for Penalty Relief

Several strategies exist for taxpayers to potentially reduce or eliminate penalties associated with late filing or payment, depending on their circumstances and compliance history.

One common strategy is filing an extension, which provides additional time to submit the tax return but not to pay any taxes owed. Taxpayers can request an automatic six-month extension by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by the original tax deadline. While this extends the filing deadline, any tax due must still be paid by the original due date to avoid failure-to-pay penalties and interest. However, paying at least 90% of the owed taxes with the extension request can help avoid the failure-to-pay penalty.

Another option is requesting penalty abatement due to “reasonable cause.” This applies when a taxpayer can demonstrate that they exercised ordinary care and prudence but were still unable to file or pay on time. Examples of reasonable cause include natural disasters, serious illness, death in the immediate family, or the inability to obtain necessary records due to circumstances beyond control. The IRS evaluates requests case-by-case, requiring explanations and supporting documentation.

The IRS also offers a “First-Time Penalty Abatement” program for certain penalties. To qualify, taxpayers typically must have a clean compliance history for the preceding three tax years, meaning no significant penalties were assessed during that period. Additionally, all required returns must be filed, and any tax due must be paid or arrangements made to pay it. This relief is a one-time consideration for qualifying taxpayers.

For taxpayers who cannot pay their tax liability in full, payment plans can help mitigate ongoing penalties and interest. Options include an Installment Agreement, which allows taxpayers to make monthly payments over a set period, or an Offer in Compromise (OIC), which allows certain taxpayers to settle their tax debt for a lower amount than what is owed. While interest and penalties generally continue to accrue under an Installment Agreement, these options can prevent more aggressive collection actions and provide a structured path to resolving tax debt. An OIC is typically considered when a taxpayer faces significant financial hardship and cannot pay the full amount without undue burden.