What Happens If You Don’t File Taxes, or File Taxes Late?
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The penalty for not filing taxes is usually 5% of the tax owed for each month your return is overdue.
The the minimum penalty is $435 or the amount of tax owed, whichever is smaller. The maximum is 25% of your bill.
If you're due a refund, or you're not required to file income taxes, there's no penalty for not filing taxes, according to the IRS.
If you owe taxes and don't file your federal income tax return by the tax deadline, there may be consequences in the form of penalties and interest. The caveat is that not everyone is required to file taxes.
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What happens if you don't file your taxes, or file taxes late?
If you owe taxes and you don't file or file late, the IRS may apply a penalty known as the late-filing penalty or the failure-to-file penalty. The penalty for not filing taxes is usually 5% of the tax owed for each month or part of a month the return is late.
If your return is more than 60 days late, the minimum penalty for not filing taxes is $435 or the amount of tax owed, whichever is smaller. The maximum failure-to-file penalty is 25% of your tax bill.
The agency recommends taxpayers who missed the filing deadline file as soon as possible. Filing and paying now can reduce the fees and interest you'll pay on your tax bill.
Late filers may be eligible tax relief in the form of a penalty abatement if they meet certain conditions. For example, you might be eligible for penalty relief if you have a reasonable explanation for filing late or if this is your first time missing the deadline. The IRS has more information on how to apply for penalty relief on its website.
What happens if you file taxes late but don't owe anything?
There is usually no failure-to-file penalty if your tax return results in a refund. Keep in mind that you typically have just three years to claim that tax refund, though. The IRS estimates that there were approximately $1.5 billion in refunds unclaimed for 2019. Taxpayers had until July 17, 2023, to file and claim their refunds from the 2019 tax year.
How to avoid a failure-to-file penalty
A tax extension can get you an extra six months to finish your tax return, but you would have had to have filed for one by the April tax deadline for it to apply.
If you did get an extension, remember that it only gives you more time to file your tax return. It does not get you more time to pay your taxes. The agency still expected you to estimate your tax bill and submit an estimated payment by tax day. Otherwise, anything you owe past the tax deadline might be subject to that late-payment penalty and interest.
Some people, such as natural disaster victims, certain members of the military or Americans living overseas, may automatically get more time to file. Remember to keep your eye on the calendar for your extension deadline, though — if you miss it, that failure-to-file penalty could come back to haunt you.
» Filed for a tax extension? Don't miss the Oct. 16 deadline.
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What happens if you don't pay your taxes?
The IRS will issue a late-payment penalty. The late-payment penalty is not the same as the late-filing penalty. The late-payment penalty affects people who pay their taxes late. It is 0.5% of your unpaid taxes for each month your outstanding taxes are unpaid, plus interest.
The late-filing penalty affects people who don’t turn in their Form 1040 and other important tax documents on time.
If both the failure-to-file and the failure-to-pay penalties are issued in the same month, the late-filing penalty is reduced by the amount of the late-payment penalty for that month, so you'd pay a combined fee of 5% for each month (or partial month) your return is late.
» MORE: How to file back taxes
How long can you go without filing taxes?
If you're trying to test limits, this is a risky proposition. While the government usually has just six years to charge you with criminal tax evasion, it has forever to collect the taxes you owe and assess penalties. In addition to the failure-to-file penalty, these things could happen to you when the IRS catches up to you:
Failure-to-pay penalty: If you don’t pay the taxes you owe by the deadline, the agency can penalize you 0.5% of the unpaid balance every month, up to a total of 25%.
Interest: On top of the failure-to-pay penalty, interest accrues on your unpaid taxes.
A substitute return: If you fail to file but the IRS has some information needed to calculate your taxes, such as your W-2 form, you may be notified by mail that it has filed a return on your behalf. It won’t consider the tax credits, deductions or other tax breaks you may have taken if you’d done your taxes.
Lost refunds: You may be missing out on money you’re owed. In most cases, you get a three-year window to file previous years’ returns. Once this window closes, you forfeit your tax refund.
