What Happens If You File Taxes Late? Penalties & Next Steps
Life happens, and sometimes tax season slips through the cracks. But if you’re wondering what happens if you file your taxes late, here’s what you need to know about penalties and what to do next.
⚠️ Late Filing Penalty
If you miss the tax deadline (typically April 15), the IRS will charge a penalty for late filing—even if you owe $0 in taxes. The penalty is usually 5% of the unpaid taxes for each month your return is late, up to 25%.
💸 Late Payment Penalty
If you owe taxes and don’t pay by the deadline, the IRS will charge a late payment penalty. This is typically 0.5% of the unpaid taxes per month, starting the day after the deadline and continuing until you pay the balance. (But this can rise to 1% per month if you go a long time without paying.)
📅 Interest on Unpaid Taxes
In addition to penalties, the IRS charges interest on any unpaid taxes. The interest rate is set quarterly and is based on the federal short-term rate plus 3%. This can add up quickly, so it’s best to pay what you owe as soon as possible!
📝 What You Can Do to Avoid Extra Penalties
File for an Extension: If you can’t file on time, you can file for a 6-month extension (new deadline: October 15), but remember, this doesn’t extend your payment deadline.
Pay What You Can: Even if you can’t pay everything, send in what you owe to reduce penalties and interest.
Set Up a Payment Plan: The IRS offers installment agreements if you need more time to pay.
💡 What’s Next?
File ASAP: The sooner you file, the sooner you can stop accruing penalties and interest.
Contact the IRS: If you’re facing serious financial hardship, the IRS may offer options like penalty relief.
✅ Pro Tip: To avoid late filing and payments in the future, set up calendar reminders and consider filing early. Filing early means fewer surprises and more time to plan!