What Happens If I Miss Filing My Taxes?

Missing a tax filing deadline can lead to unexpected consequences. Addressing an overdue tax situation promptly minimizes financial impacts. Understanding the steps for filing late and managing associated tax balances is key to resolution.

Understanding the Implications of Missing the Deadline

Failing to file a tax return on time results in a failure-to-file penalty. This penalty is 5% of the unpaid tax per month or part of a month a return is late, up to a maximum of 25%. If a return is over 60 days late, a minimum penalty applies: the lesser of $510 for 2025 tax returns or 100% of the tax owed.

A separate failure-to-pay penalty applies if taxes are not paid by the due date. This penalty is 0.5% of the unpaid tax per month or part of a month the tax remains unpaid, up to a maximum of 25%. If both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty, ensuring the combined penalty does not exceed 5% for that month.

Interest accrues on any unpaid tax balance from the original due date until payment. This interest is compounded daily, calculated on the previous day’s balance plus accumulated interest. The rate is determined quarterly as the federal short-term rate plus three percentage points. For example, the interest rate on underpayments for individuals for the first two quarters of 2025 is 7%.

If a tax refund is due, there is no failure-to-file penalty. However, the return must be filed to claim any refund owed. Filing late delays the refund’s receipt.

Steps to Take When You File Late

When facing an overdue tax return, gather all necessary documents for accurate filing. This includes collecting income statements like W-2 forms, 1099 forms for various income types, and statements supporting deductions and credits. If a document like a W-2 or 1099 is missing, contact the employer or payer, or request a wage and income transcript directly from the IRS.

Even if no tax is owed, a filing requirement may exist. For instance, self-employed individuals must file if their net earnings from self-employment are $400 or more. A filing obligation also exists to claim certain refundable credits, which could result in a refund even if no tax was withheld or paid.

Once all information is compiled, prepare the late return. Tax preparation software can handle prior-year returns, or a qualified tax professional can assist. For current or recent past tax years, some individuals qualify for IRS Free File options. Accurate preparation helps avoid delays or issues.

After the return is completed, submit it. For prior tax years, mailing a paper return is the required method. Electronic filing options are available for recent past years through tax professionals or software providers. E-filed returns are processed within 21 days, while mailed paper returns can take 6 to 8 weeks for processing and refund issuance.

Addressing Unpaid Tax Balances

If a tax return is filed late and an unpaid tax balance exists, address this obligation to prevent complications. Paying as much of the balance as possible immediately, even if the full amount is not feasible, reduces the accrual of penalties and interest. Every payment lowers the principal amount subject to these charges.

For taxpayers unable to pay their full tax liability immediately, several payment options are available through the IRS. A short-term payment plan allows up to 180 additional days to pay the tax liability in full. This plan is available if combined tax, penalties, and interest owed are less than $100,000. While there is no setup fee, interest and the failure-to-pay penalty continue to accrue.

An installment agreement allows taxpayers to make monthly payments over a longer period, up to 72 months or six years. This agreement can be set up online, by phone, or by filing Form 9465. An online payment agreement is available for those owing $50,000 or less in combined tax, penalties, and interest. A user fee applies to installment agreements, but a reduced fee or waiver is available for low-income taxpayers.

For taxpayers experiencing significant financial difficulty, an Offer in Compromise (OIC) is an option. An OIC allows certain taxpayers to settle their tax liability for a lower amount than owed. This program has strict eligibility criteria and requires submission of Form 656, Offer in Compromise, along with detailed financial statements, such as Form 433-A for wage earners and self-employed individuals. An application fee is required, though it can be waived for low-income individuals.

Failing to address unpaid tax balances can lead to collection actions by the IRS. These actions include filing a Notice of Federal Tax Lien, a public record of the tax debt that can attach to current and future property. The IRS may also issue a tax levy, allowing the agency to seize wages, bank accounts, or other property to satisfy the unpaid debt. Engaging with the IRS to establish a payment solution helps prevent enforcement measures.