What Happens If You Don’t File Taxes by October 15?

Filing taxes on time is a legal requirement, and missing the October 15 deadline can lead to financial consequences. Whether you owe money or expect a refund, failing to submit your return could result in penalties, interest charges, or delays in receiving any refunds.

If you’ve missed the deadline, it’s important to understand what happens next and what steps you can take to minimize potential issues.

Penalty for Missing the Deadline

Failing to file by October 15 can lead to penalties that increase the longer you wait. The Failure to File Penalty applies if you owe taxes and have not submitted your return. The IRS calculates this penalty as 5% of the unpaid tax per month, up to a maximum of 25%. Even if you are just a few days late, the penalty covers the entire month.

If your return is more than 60 days late, the minimum penalty is either $485 or 100% of the unpaid tax, whichever is lower.

If both the Failure to File and Failure to Pay penalties apply, the total penalty is 5% per month. The Failure to Pay Penalty is 0.5% per month, but when both penalties are assessed, the Failure to File Penalty is reduced to 4.5% per month until it reaches its 25% cap.

Accrued Interest on Unpaid Taxes

Unpaid taxes accumulate interest, compounding daily until the balance is fully paid. The IRS determines this rate quarterly, based on the federal short-term rate plus 3%. As of 2024, the interest rate for individual taxpayers is 8%, meaning the balance grows at a daily rate of approximately 0.0219%. Unlike penalties, there is no cap on interest.

Interest begins accruing from the original tax filing deadline, typically April 15, not the extended deadline of October 15. This means that even if you filed for an extension, any unpaid amount has already been accumulating interest for months.

For example, if you owed $5,000 and did not pay by April 15, by October 15, your balance would have increased by roughly $200 due to interest. If unpaid for another year, the total interest could exceed $400, depending on future rate adjustments.

Unlike penalties, which may be reduced or waived in some cases, interest is generally non-negotiable. The only way to stop it from accumulating is to pay the full balance. Even taxpayers on an installment plan will continue to accrue interest until the debt is paid off.

Refund Obstacles for Late Filers

Missing the deadline doesn’t just affect those who owe money—taxpayers expecting a refund can also face complications. The IRS does not impose penalties for filing late when a refund is due, but waiting too long can result in losing the refund entirely. Taxpayers have three years from the original filing deadline (typically April 15) to submit a return and claim their refund. After this period, the unclaimed amount is forfeited to the U.S. Treasury.

A late return may also be flagged for review, particularly if it includes refundable credits such as the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). These credits are frequently audited due to errors and fraud. If discrepancies arise, the IRS may request further documentation, delaying the refund.

Processing times for late returns can also be longer. While e-filed returns are typically processed within 21 days, paper returns often take much longer. If a return is filed months or years after the deadline, it may require manual review, further slowing the process.

Options if You Missed the Deadline

If you’ve missed the deadline, file your return as soon as possible. Even if you cannot pay the full amount owed immediately, filing promptly stops additional late-filing penalties from accumulating. The IRS offers Free File Fillable Forms for electronic filing, and paper returns remain an option if e-filing is not feasible.

For those struggling to pay, several payment arrangements are available. The IRS Online Payment Agreement allows eligible taxpayers to set up an installment plan to spread the balance over time. Short-term plans (up to 180 days) have no setup fees, while long-term plans require a fee unless payments are made via direct debit.

If an installment plan is unaffordable, requesting Currently Not Collectible (CNC) status can temporarily pause IRS collection efforts, though interest will still accrue.

In some cases, penalties may be reduced or eliminated through the First-Time Penalty Abatement (FTA) program, available to taxpayers with a history of compliance. Those facing significant financial hardship may also qualify for an Offer in Compromise (OIC), which allows settlement of tax debt for less than the full amount owed.