What Happens If You Miss the Tax Deadline?

The federal income tax return, for most taxpayers, is due on April 15th of each year, unless that date falls on a weekend or holiday. This date marks the deadline for both filing your tax return and paying any taxes owed for the previous calendar year. While the April 15th date is widely known, specific consequences can arise if a tax return is not submitted or taxes are not paid by the due date. These consequences involve financial penalties and interest charges that can accumulate over time.

Understanding Consequences

Missing the tax deadline can result in financial penalties, generally categorized into a failure-to-file penalty and a failure-to-pay penalty. These two penalties can be applied independently or simultaneously, depending on whether the return was filed and whether taxes were paid.

The failure-to-file penalty is more substantial than the failure-to-pay penalty. It is assessed at 5% of the unpaid taxes for each month or part of a month that a tax return is late, with a maximum penalty of 25% of your unpaid tax. If a return is more than 60 days late, the minimum failure-to-file penalty is either $485 (for returns due in 2024) or 100% of the tax owed, whichever amount is smaller.

Conversely, the failure-to-pay penalty is 0.5% of the unpaid taxes for each month or part of a month that taxes remain unpaid, also capped at 25% of your unpaid tax. If both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty for that month, meaning the combined penalty generally does not exceed 5% per month. Interest can also be charged on underpayments and unpaid penalties, compounding daily. For example, the interest rate on underpayments was 8% per year for the third quarter of 2024.

Actions to Take After Missing a Deadline

If you have missed a tax deadline, taking prompt action minimizes potential penalties and interest. The first step is to prepare and submit your overdue tax return as quickly as possible. Even if you cannot pay the tax you owe, filing the return will prevent the failure-to-file penalty from continuing to accrue, which is much higher than the failure-to-pay penalty.

When filing late, ensure you use the correct tax forms for the relevant tax year. For instance, if you are filing a 2023 tax return in 2025, you would use the 2023 version of Form 1040. While electronic filing is preferred, past-due returns for previous tax years often need to be printed and mailed, as e-filing systems may only support the current and immediately prior tax years.

If you owe taxes and cannot pay the full amount immediately, several payment options are available. You can make payments online directly from your bank account, via debit/credit card, or by mailing a check or money order. If a lump sum payment is not feasible, you may qualify for a short-term payment plan, typically lasting up to 180 days, which incurs interest and potential penalties until the balance is paid. For longer payment periods, an installment agreement allows you to make monthly payments for up to 72 months, also subject to interest and late payment penalties. In cases of significant financial hardship, an Offer in Compromise (OIC) may be an option, allowing certain taxpayers to resolve their tax liability for a lower amount than what they originally owe, if specific criteria are met, demonstrating an inability to pay the full amount.

Seeking Penalty Relief

For taxpayers who have incurred penalties, avenues exist to seek relief under specific circumstances. One common form of relief is first-time penalty abatement, which may be granted if you have a clean compliance history for the past three years, meaning you have no prior penalties for failing to file, pay, or deposit taxes. To qualify, you must have filed all required returns and paid, or arranged to pay, any tax due. This relief is available for failure-to-file, failure-to-pay, and failure-to-deposit penalties.

Another basis for penalty abatement is demonstrating “reasonable cause” for the non-compliance. Reasonable cause refers to situations where circumstances beyond your control prevented you from meeting your tax obligations. Examples include natural disasters, serious illness, death in the immediate family, or the unavoidable absence of the taxpayer. It also encompasses situations where you could not obtain necessary records despite exercising ordinary business care and prudence. When requesting relief based on reasonable cause, provide a written explanation detailing the facts and circumstances, along with any supporting documentation, such as medical records or police reports.

To formally request penalty relief, respond to the penalty notice you received or file Form 843, Claim for Refund and Request for Abatement. Clearly state the type of penalty you are seeking to abate and the reason for your request.

Extending Your Filing Time

For taxpayers who anticipate not being able to file their tax return by the original deadline, requesting an extension is a proactive measure. An extension grants additional time to submit your tax return, typically an additional six months. This can be requested by using tax software or by filing Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by the original tax deadline.

It is important to understand a distinction: an extension provides more time to file your tax return, but it does not extend the time to pay any taxes owed. If you expect to owe taxes, you should estimate that amount and pay it by the original due date, even if you file an extension. Failure to pay taxes by the original deadline will result in failure-to-pay penalties and interest, even if an extension to file was granted. The primary benefit of filing an extension is to avoid the failure-to-file penalty, which is often much higher than the failure-to-pay penalty.