What Happens If You Miss The Deadline For Filing Your Taxes?

By the Pachyy Editorial Team The Pachyy Editorial Team comprises a diverse and experienced team of writers, researchers and subject matter experts whose aim is to provide you with useful insights, guidance and commentary on all matters related to your personal finances.
Filing taxes is an annual obligation for the majority of U.S. citizens. Normally, tax returns must be submitted by April 15th. In the event that this date falls on a Sunday or a holiday, the deadline is usually extended to the next business day. For instance, if April 15th falls on a Sunday, the new deadline for the tax year would be Monday, April 16th. However, if you end up being late in filing your taxes, what are the consequences?

What to Do if You Can’t File Taxes by the Deadline?

If you realize that the tax deadline is approaching but you won’t be able to file your taxes in time, don’t worry! You can consider requesting a tax extension. This will give you extra time to file and pay your taxes without having to worry about unexpected fees or costs. However, it’s important to understand the consequences of not paying your taxes on time. Unfortunately, people who file or pay their taxes late may be subjected to fees and penalties. Once you’ve filed your taxes, you have up to 120 days to pay any taxes you owe. Depending on the timing of your filing and payment, you may be charged not only a late filing fee but also a late payment fee.

Understanding Late Filing Penalties

A late filing penalty is a fee imposed by the IRS on taxpayers who submit their tax returns after the deadline. Additionally, individuals who file their tax returns late and have outstanding tax liabilities may also be subject to a failure to pay penalty if they fail to remit payment to the IRS on time. However, to assist individuals in avoiding excessive indebtedness, the IRS waives both late filing and late payment penalties once they reach 25% of the total amount of unpaid taxes.

How Does the IRS Calculate a Late Payment Penalty?

When it comes to calculating a late payment penalty or a late filing penalty, the IRS has a few things to consider. First, if you fail to file your taxes by the deadline, the penalty may be 5% of the unpaid taxes owed for each month (or part of a month) that has passed. Let’s take an example: if you owe $850 in taxes and you are one month late in filing, the penalty would be 5% of $850, which amounts to $42.50. This means your total unpaid tax balance would be $892.50. Additionally, please note that the maximum late filing penalty fees cannot exceed 25% of the total unpaid tax. In the example above, this means that the late filing penalty for $850 in taxes owed would not exceed approximately $212.50. When combined with the original tax bill, the total possible penalties for failing to file your tax return would be around $1,062.50.

How Long Will a Penalty for Filing Late Accumulate?

The time in which a tax penalty accumulates depends on a few factors. Firstly, it depends on the total amount of unpaid tax. The late payment fees will stop accumulating once they have reached 25% of the total unpaid tax amount. Another consideration is the length of time since the late filing fees started. IRS penalties for failing to file will reach a maximum after five months. However, while the failure to file penalties stop accumulating after five months, the failure to pay penalties will continue to accrue until they reach 25% of the total unpaid tax amount. Lastly, individuals who file their taxes more than 60 days late may face a minimum penalty of $435, or the full amount of the required tax shown on the return, whichever is less.

What to do if you receive an IRS Notice or Letter?

If you receive an IRS notice or letter, it’s important to understand the reasons behind it. Here are some common reasons:
  • You have a balance due on your taxes.
  • Your refund amount is different from what you expected.
  • There’s a question or uncertainty about your tax return.
  • Identity verification is required by the IRS.
  • Additional information is needed to complete your tax return.
  • There has been a significant change in your tax return.
  • Delays are occurring in processing your tax return.
When you receive an IRS notice or letter, take the time to carefully read through it. If you have any doubts or questions, reach out to the IRS for clarification. It may even be helpful to consult a tax professional for guidance. The next step is to respond promptly. Look for the response date mentioned in the notice or letter, as that’s the deadline to address the issue raised by the IRS. By responding promptly, you’ll increase your chances of minimizing additional fees or charges. Plus, it will preserve your right to appeal if necessary. If you disagree with the reasoning behind the IRS notice or letter, you have the option to appeal. For instance, if you believe you paid the correct amount of taxes, despite the IRS claim that you underpaid, gather evidence to support your case. Make sure to keep any evidence that proves the notice or letter was sent in error.

Will I Be Charged Interest on a Failure to File Penalty?

Regrettably, you may be subject to interest charges on any tax penalties you incur. Nevertheless, be assured that the total amount you owe in fees and taxes will not exceed 25% of the unpaid taxes. According to the law, the IRS is unable to waive or reduce interest charges unless the penalty itself is eliminated or reduced.

Need Help with Removing a Failure to File Penalty from Your Tax Profile?

If you find yourself facing tax penalties or fees, there are potential ways to get them removed or reduced by the IRS. You may have a chance of having penalties eliminated if you can demonstrate that you acted in good faith and provide reasonable cause for why you were unable to meet your tax obligations. Let’s take an example: suppose you were a victim of identity theft and your checking account information was stolen. If your frozen bank account prevented you from using it to pay taxes, the IRS might grant you an extension and waive any fees incurred. It’s important to note that the IRS cannot remove or reduce fees for individuals who don’t have a valid reason for filing or paying taxes late. If, for instance, you simply forgot to file your taxes despite having sufficient funds in your checking account, the IRS is unlikely to remove or reduce the associated penalties.

Discovering Ways to Quickly Obtain Cash When You Owe Taxes

Below, you will find various financial options that can assist you in managing your tax obligations more easily.

Convenient Installment Loans for Immediate Cash

An online installment loan is a valuable funding resource that can greatly aid in paying your taxes. Direct lenders offer personal installment loans with competitive rates, tailor-made terms, and flexible loan amounts, thereby ensuring a stress-free tax payment process.

Exercise Caution with Payday Loans

While easy online payday loans are a popular choice for those seeking rapid cash, they may not be the wisest financial decision for you. These loans tend to have exorbitant interest rates that can deepen your debt instead of solving it.

Consider Car Title Loans

If you own a vehicle, you have the option to use it as collateral for a car title loan. The amount you receive depends on factors such as your vehicle’s equity and your income. Individuals with higher incomes and more valuable cars may qualify for larger loan amounts. Keep in mind that car title loans can be risky as you may lose your vehicle if you fail to make payments or default on the loan.

Examining the Viability of Cash Advances

Another possibility is taking a cash advance on your credit card to cover your tax expenses. However, be aware that credit card cash advances often come with slightly higher interest rates compared to regular credit card purchases. It’s essential to pay off the balance promptly to avoid accumulating additional debt.

Exploring Credit Union Loans

Consider approaching a credit union for a loan if you reside within their designated area or work in a specific industry. Before applying, ensure that you meet their specific approval requirements.

Tips for Filing Taxes Late

Hey there! We understand that sometimes life gets in the way and filing your taxes late happens. But don’t worry, we’re here to help you out! If you find yourself past the tax day due date without having filed or paid your taxes, it’s important to take action quickly. The best thing you can do is e-file your return as soon as possible to avoid any unwanted late payment fees or penalties. If you need assistance, there are tax professionals available who can help you file and pay your taxes at a small cost or even for free! They’ll guide you through the process and ensure everything is done correctly. Remember, filing your taxes late doesn’t always mean bad news! Many taxpayers actually receive a tax refund after they file. This happens when you’ve overpaid throughout the year, and the IRS gives back the extra money to you. The amount of your refund can vary, ranging from a few dollars to several thousand dollars, depending on your dependents and assets. For more information, you can check out these references:

We hope this information helps you navigate the process smoothly. Feel free to reach out if you have any further questions or need additional assistance. Good luck!