What Happens if You Don’t File Your Taxes on Time?

Tax season can be stressful, but missing the deadline can make things even worse. If you don’t file your taxes on time, you could face penalties, interest charges, and even legal consequences. Whether you forgot, didn’t have the funds to pay, or simply procrastinated, here’s what you need to know about what happens when you file late.

1. Failure-to-File Penalty

The IRS imposes a Failure-to-File penalty if you don’t submit your tax return by the deadline (April 15th in most cases). This penalty is 5% of your unpaid taxes per month, up to a maximum of 25%. The longer you wait, the more you owe.

💡 Example: If you owe $3,000 and file five months late, you could face a $750 penalty ($3,000 x 25%).

2. Failure-to-Pay Penalty & Interest Charges

If you owe taxes and don’t pay on time, the Failure-to-Pay penalty kicks in. This is 0.5% of your unpaid taxes per month (up to 25%), plus interest, which compounds daily. Even if you file on time, failing to pay can quickly increase your tax debt.

💡 Pro Tip: If you can’t pay in full, the IRS offers payment plans to help you avoid escalating penalties.

3. Losing Your Tax Refund

If you’re due a refund but don’t file your return, the IRS won’t issue your money until you do. Even worse, if you don’t file within three years, you forfeit your refund entirely.

💡 Example: If you were owed $1,200 in 2021 but didn’t file by April 2024, that money is gone for good.

4. IRS Collection Actions

The IRS has the power to take serious action against unpaid taxes, including:

• Tax liens: The IRS can place a legal claim on your property.
• Wage garnishment: A portion of your paycheck can be taken to cover your debt.
• Bank levies: The IRS can freeze and seize funds from your bank account.

💡 Important: If you owe a large amount and don’t file for years, the IRS may even pursue legal action.

5. Missing Out on Tax Credits

By not filing, you may lose access to valuable tax credits, such as the Earned Income Tax Credit (EITC) or Child Tax Credit. These can significantly lower your tax bill or increase your refund.

What If You Can’t Pay?

Filing late because you can’t afford your taxes? File anyway to avoid the hefty failure-to-file penalty. Then, explore options like:
✅ IRS payment plans
✅ Offer in Compromise (settling for less than you owe)
✅ Requesting a temporary delay due to hardship

The worst thing you can do is ignore your tax filing responsibilities. Even if you owe, it’s always better to file on time or as soon as possible. If you’re behind on taxes or need help filing, The Tax Axe is here to help!