Missing the tax filing deadline can feel overwhelming, especially if you owe money or just forgot. The IRS expects everyone who meets the income threshold to file, and skipping it usually leads to extra costs and headaches. The good news is that penalties kick in mainly when you owe taxes, and there are straightforward ways to get back on track. Acting sooner rather than later keeps things from getting worse.
Immediate Effects
- Penalties start adding up: If you owe taxes, the IRS charges a failure-to-file penalty of 5% of the unpaid amount for each month (or part of a month) your return is late, up to a maximum of 25%.
- Interest accrues daily: You’ll also pay interest on any unpaid taxes from the original due date, and it compounds over time.
- Combined penalties: If you owe and don’t file, you get hit with both filing and payment penalties, but the filing one gets reduced so the total is usually 5% per month at first.
- Possible substitute return: The IRS might prepare a return for you using info they have (like W-2s), but it often leaves out deductions or credits, so you could end up owing more.
Long-Term Consequences
Over time, the penalties and interest can balloon your tax bill significantly. The IRS may send notices, place a lien on your property, garnish wages, or seize bank funds to collect what you owe. Unfiled returns also mean no statute of limitations—the IRS can pursue you indefinitely until you file. Your credit score could take a hit, loan approvals might get delayed, and you risk missing out on refunds or credits if you’re due any money. In rare cases involving willful evasion, criminal charges are possible, but that’s uncommon for most people who simply fall behind.
Can You Fix It?
Yes, and it’s usually simpler than you think. File your missing return(s) as soon as possible—even if you can’t pay everything right away. This stops the failure-to-file penalty from growing. Pay what you can, then set up an installment agreement through the IRS website or by calling them. If you qualify, you might get penalties reduced through first-time abatement or reasonable cause relief. Gather your documents, use free IRS tools, or work with a tax professional to prepare accurate returns. Filing late is better than not filing at all.
Final Thoughts
This is general information to help you understand the basics—every situation is different. For your specific case, check IRS.gov or talk to a tax professional. They can guide you through the steps and help avoid bigger issues down the road.
