What Happens If You File Your Taxes Late—And How to Avoid Big Penalties (2024)

Monday, April 15, 2024 is the deadline to either file your income tax return for the 2023 tax year or request a tax extension. It is also the deadline for paying any taxes owed, as an extension to file isn’t an extension to pay.

But each year, some taxpayers disregard these dates and either don’t file or file late without requesting an extension. The Internal Revenue Service frowns on both, but penalties are most severe if you owe taxes.

Failing to pay your tax bill when it is due could mean penalties up to 47.5% of your original tax bill, plus interest. (Though if you owe penalties for the 2020 and 2021 tax years, you might catch a break and see those waived.) In the most extreme cases, the IRS could collect its money without your permission by garnishing your wages, taking money from your bank account or seizing and selling your home or car.

Here’s what you need to know about the late penalty for filing your taxes, including tips for procrastinators to keep you on Uncle Sam’s good side.

When are taxes due?

The deadline to file your 2023 tax return and pay any taxes owed is Monday, April 15, 2024. If you’re in Maine and Massachusetts, you’ll have slightly longer—until Wednesday, April 17, 2024—due to state holidays.

Taxpayers also have the option to file a tax extension, which extends your filing deadline to Oct. 15, 2024. But even with an extension, if you owe or think you might owe, you need to pay that amount in full by the April 15 deadline to avoid penalties and interest.

What happens if you don’t file or pay your taxes?

If you file your taxes late, the consequences depend on whether the IRS owes you or you owe them. If you owe, you could be subject to two penalties: failure to file and failure to pay.

If you owe taxes and don’t file

Failure-to-file penalty

If you owe the government money and fail to file your 2023 tax return by the due date, the IRS assesses a failure-to-file penalty. This penalty is 5% of your unpaid taxes for each whole or partial month your return is late.

For example, if you originally owe $1,000, your failure-to-file penalty would be $50 a month. However, if your return is over 60 days late, a minimum penalty kicks in—which for tax returns due in 2024 is the lesser of $485 or 100% of the tax owed.

If you owe taxes and don’t pay

Failure-to-pay penalty

If you file your tax return by the due date but don’t pay the taxes you owe, the IRS assesses a failure-to-pay penalty. This penalty is 0.5% of your unpaid taxes for each whole or partial month that the taxes remain outstanding and capped at 25% of taxes owed for the year. So, for that same $1,000 tax bill, your failure-to-pay penalty would be $5 a month and max out at $250.

If you owe taxes and don’t file and don’t pay

Failure-to-file penalty & failure-to-pay penalty

The IRS can hit you with a double penalty if you fail to file your return and don’t pay what you owe by the due date. But here, the IRS cuts you a bit of a break. In months where both penalties apply, your failure-to-file penalty is reduced by your failure-to-pay penalty.

For instance, if your tax bill is $1,000 and both penalties apply, your failure-to-file penalty is 4.5%, and your failure-to-pay penalty is 0.5%, for a total monthly penalty of $50. While your failure-to-file penalty will max out after five months, the failure to pay penalty continues to accrue until it hits 25% of your tax bill.

Don’t forget interest

That’s right—interest on unpaid taxes starts to accrue from their original due date until paid in full, and today’s rate for individuals is a steep 8%. (The IRS updates its rate quarterly based on prevailing interest rates.)

“This is an expensive time to be late on taxes owed,” says Paul T. Joseph, a certified public accountant. He adds that between penalties and interest, taxpayers could see their bills skyrocket in a short time.

Waived tax penalties

In late 2023, the IRS announced it would be waiving nearly $1 billion in tax penalties (but not interest) related to tax years 2020 and 2021. The waiver only applies to taxpayers who owe less than $100,000 in taxes for each of those years and received an initial balance due notice prior to Dec. 7, 2023.

It’s important to note that this is a one-time move by the agency and due to circ*mstances surrounding its pandemic-era collection letter activities. Taxpayers should not expect further penalty waivers beyond these parameters.

What happens if you don’t file your taxes but don’t owe money?

It is possible to lose your refund for a given tax year if you don’t file within three years of the original deadline. You won’t face a penalty if you’re due a refund, but you should still file by the deadline. “You never want to give the government an interest-free loan,” says Emily Irwin, an advice and planning executive with Wells Fargo.

The IRS says most people who miss out on refunds do so because they think they didn’t earn enough to make filing a return necessary. However, you may be due a refund even if you’re not required to file a return if you are:

• A student or part-time worker who had taxes withheld from your paycheck
• A senior or retiree who had taxes withheld from your retirement fund or Social Security income
• A taxpayer eligible for refundable tax credits such as the earned-income tax credit or child tax credit, which can create a refund even if you don’t owe taxes

Tips to avoid tax penalties

Whether you owe or aren’t quite sure yet, there are steps to take to ease the stress and keep Uncle Sam on your side.

Check for overlooked tax breaks

If you’re staring down a tax bill that is more than you expected, Irwin says to look for potential levers you can pull to decrease what you owe.

If you have some extra cash, Irwin suggests making a contribution to a traditional IRA—which you can do up to the April filing deadline. Single, head-of-household and joint filers who aren’t covered by an employer’s retirement plan can deduct their full traditional IRA contributions up to the annual contribution limit. However, if you’re married filing jointly or separately, and one or both of you are covered by an employer’s retirement plan, consult the IRS’s guide to how much, if any, of your traditional IRA is tax-deductible.

If you don’t have extra cash or have missed the April deadline, all isn’t lost. “Deductions are another wonderful way to minimize your tax burden,” says Irwin. You can take the standard deduction, a fixed amount that any taxpayer can take to reduce their taxes. But Irwin says it can’t hurt to run the numbers to ensure that itemizing deductions doesn’t make more sense.

For instance, suppose you’re self-employed and typically file a Schedule C, Profit or Loss from Business (Sole Proprietorship), or had unreimbursed medical expenses totaling more than 7.5% of your adjusted gross income. In that case, Irwin says you could be missing out on valuable deductions by assuming the standard deduction offers the greatest benefit. Tax software can help you identify whether you have enough deductions to make itemizing the better choice.

Check your credits

Another tip is to make sure you’re claiming any tax credits for which you’re eligible, including the child tax credit, EITC and others related to higher education. Explore potential tax credits that use your AGI to qualify in Buy Side from WSJ’s complete guide to adjusted gross income. We’ve also gone in-depth on the EITC in our step-by-step guide to Form 1040—a tax credit the IRS estimates that one in five eligible taxpayers fail to claim.

What to do if you still owe

If you don’t have the cash to pay your bill in full, don’t panic, says Akeiva Ellis, a certified public accountant. “It is going to be OK, but don’t ignore the problem,” she says. “The IRS never forgets.”

Whether filing your return or an extension, Ellis says to pay as much of your tax bill as possible when you file. Then, immediately contact the IRS to request a payment plan via phone, mail or online at the IRS website. “A payment plan can keep your account in good standing and prevent damages, like the IRS garnishing your wages.”

Payment plans allow you to spread your total tax burden across a longer period to make it more manageable. The basic payment plan spans six months, though plans can go up to 72 months, depending on how much you owe in taxes.

—Additional reporting by Aly J. Yale