IRS late filing penalty: What happens if you file taxes late?
Life happens – and deadlines are missed. For any number of reasons, some taxpayers miss the standard tax deadline for the tax year, which could result in a failure to file penalty for affected taxpayers. In fact, any affected taxpayer who owes taxes and doesn’t file taxes on time could face a penalty from the Internal Revenue Service (IRS). So, what happens if you file taxes late? We’ll uncover information about the failure to file penalty from the IRS here.
What happens if you file your taxes late?
A failure to file penalty is charged on tax returns filed after the due date or extended due date unless there’s a cause for filing late. There is also a failure to pay penalty, which may also apply if you owe money to the IRS.
If you filed your federal return after the deadline, will you incur a penalty or interest?
If you owe tax, you usually will incur a penalty or interest. However, you won’t pay a failure to pay penalty and won’t accrue interest if you’re:
- Receiving a refund
- Living outside the country while serving in the military or in a federally declared disaster area
If you have a balance due, the IRS can assess late filing and late payment penalties. The IRS charges interest on unpaid tax from the tax return’s due date until the date of payment. Let’s look at these penalties in more detail.
Penalty for filing taxes late and failing to pay
So, what’s the penalty for filing taxes late, you wonder? Well, it’s more complicated than a flat amount. Keep in mind, the penalty rules may be impacted if you have a penalty for not paying. Let’s dig into the details.
- Failure to file penalty: 5% of the balance due per month up to 25%
- Failure to pay penalty: 0.05% up to 25% of the unpaid taxes for each month (or part of a month) the tax balance remains unpaid
As time goes on, the way your tax penalty is assessed changes:
- For each month or part of a month that your return was late, the combined maximum penalty is 5% (4.5% late filing and 0.5% late payment), up to 25%.
- The late filing penalty applies to the tax that remains unpaid after the due date. Unpaid tax is the total tax shown on your return reduced by amounts paid through withholding, estimated tax payments, and allowed refundable credits.
- If after five months you still haven’t paid, the failure to file penalty will max out, but the failure to pay penalty continues until the tax is paid, up to 25%.
- The maximum total penalty for failure to file and pay is 47.5% (22.5% late filing and 25% late payment) of the tax.
- However, if your return was over 60 days late, the minimum failure to file penalty is the smaller of $450 (for 2023) or 100% of the tax required to be shown on the return.
Related: Learn how to address IRS penalties.
How to avoid an IRS penalty for late filing
If you’re sure you can’t make the tax deadline, file an extension. You can do this by filing IRS Form 4868. This will give you additional time to file—usually you have six additional months, usually until October 15, to file a return if you apply for extension by the original due date of the return.
Remember, you should pay any tax due by the tax deadline or you’ll incur a penalty. Generally, if you pay at least 90% of your owed taxes with your extension request, you may not face a failure-to-pay penalty. This can be through amounts you’ve had withheld, estimated payments you made during the year and payments made at the time you request the extension. You should pay any remaining balance by the extended due date.
More help with IRS late filing penalties
To have an IRS first-time penalty abatement applied you need to call or write the IRS. You may be able to avoid the penalty because you haven’t had any other IRS charges in the past three years. This option is available for those who incur failure to file and failure to pay penalties.
Want to learn more about how to address IRS penalties or need more help? Your H&R Block tax professional will handle penalty notices and will communicate with the Internal Revenue Service for you. Get help from a trusted professional at H&R Block.
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