How To File Your Taxes Late and What to Do

Many individuals may be unable to file their federal income tax return by the designated deadline. Delays can stem from life events, unexpected challenges, or complex tax regulations. The Internal Revenue Service (IRS) provides pathways for individuals to address overdue tax returns and manage associated tax liabilities. This guide outlines the necessary steps and available options for navigating a late tax filing.

Understanding Consequences of Late Filing

Failing to file a tax return or pay taxes by the deadline can result in financial penalties and accruing interest. The IRS imposes a failure-to-file penalty, generally 5% of the unpaid taxes for each month or part of a month a return is late, capped at 25% of the unpaid tax. If a return is more than 60 days late, the minimum failure-to-file penalty for 2025 is $525 or 100% of the unpaid tax, whichever is lower. This penalty is usually more substantial than the failure-to-pay penalty, emphasizing filing even if full payment is not immediately possible.

A separate failure-to-pay penalty applies when taxes are not paid by the due date, even if the return was filed on time. This penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. If both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty, resulting in a combined monthly penalty of 5% (4.5% for late filing and 0.5% for late payment). Interest accrues on unpaid taxes and penalties from the original due date until paid in full. For the first two quarters of 2025, the interest rate on underpayments for individuals is 7% per year, compounded daily, and can change quarterly.

Steps to File Your Overdue Tax Return

Filing an overdue tax return begins with gathering all necessary financial documents for the relevant tax year(s). This includes income statements like W-2 forms from employers and 1099 forms for various income types, such as contract work, interest, or dividends. Records of deductions, credits, and other relevant financial transactions are also important for accurate reporting.

Once documentation is collected, obtain the correct tax forms for the prior year. The IRS provides access to forms, instructions, and publications for previous years, downloadable from their website or by mail or phone. Tax software supporting prior-year filings may also be an option, though electronic filing capabilities for past years can be limited.

After completing the tax return, it must be submitted. For overdue returns, mailing a paper return to the appropriate IRS address is a common method. Sign and date the return, and keep copies of all submitted documents for personal records. While electronic filing is generally preferred for current-year returns, prior-year e-filing may only be available through tax professionals or specific software platforms.

Addressing Unpaid Taxes

Once an overdue tax return is filed and the tax owed is determined, various payment options are available if the full amount isn’t paid immediately. Standard methods include direct pay from a bank account, electronic funds withdrawal, or payment by credit or debit card. These options allow convenient and secure submission of funds to the IRS.

If the full tax liability cannot be paid in one lump sum, the IRS offers payment plans. A short-term payment plan allows up to 180 additional days to pay the balance, provided combined tax, penalties, and interest are less than $100,000. While there is no fee to set up a short-term plan, interest and late-payment penalties continue to accrue until satisfied.

For those needing more time, an installment agreement permits monthly payments for up to 72 months, typically for individuals owing $50,000 or less in combined tax, penalties, and interest. Requests can be made online, by phone, or by filing Form 9465, Installment Agreement Request. Another option for taxpayers facing financial hardship is an Offer in Compromise (OIC), which allows settling a tax debt for a lower amount. To qualify for an OIC, taxpayers must generally be current with all required tax filings and payments, and not be in an open bankruptcy proceeding.

Seeking Penalty Abatement

Taxpayers may request relief from penalties assessed due to late filing or payment. One common avenue is the First-Time Abatement (FTA) policy. This relief may be available if a taxpayer has a clean compliance history, meaning no penalties for the three prior tax years. Additionally, all required returns must have been filed, and any tax due paid or arranged for payment. The FTA applies to failure-to-file, failure-to-pay, and failure-to-deposit penalties.

If a taxpayer does not qualify for First-Time Abatement, they may seek penalty relief based on “reasonable cause.” Reasonable cause applies when circumstances beyond the taxpayer’s control prevented them from filing or paying on time, despite exercising ordinary business care and prudence. Examples include natural disasters, serious illness or death in the immediate family, or inability to obtain records. Supporting documentation and a clear explanation are important for reasonable cause abatement requests.

Requests for penalty abatement can be made by calling the IRS directly or by sending a written statement. For a formal request, taxpayers can use Form 843, Claim for Refund and Request for Abatement. This form requests abatement of certain taxes, interest, penalties, fees, and additions to tax. When completing Form 843, specify the reason for the request and include any supporting documentation.