Late Filing, Payment Penalties

Penalty for Filing a Tax Return Late

What happens if you file your return late? Will you face federal penalties for not filing your tax return by Tax Day? Review the information below:

• When IRS penalties apply: If you owe taxes and do not file a tax return or extension on time, you will incur a late filing penalty and/or late tax payment penalties including IRS interest. Thus, file either a tax return or tax extension by Tax Day - even if you can't pay any taxes then - as that would eliminate the late filing penalty which is generally greater than the late tax payment penalty. An extension only extends to tax deadline until on or around October 15; it does not extend the tax payment due date. You may face penalties if you file your return or tax extension on time, but do not pay the taxes you owe by the tax deadline.
• When IRS penalties generally don't apply: If you are expecting a tax refund and do not file a tax return on time, there are no penalties. As long as you file your return within three years, you will get the full amount of your refund unless you owe taxes from a previous year or other debt and the IRS or state offsets it.

How the IRS Calculates Tax Penalties

The IRS calculates the Failure to File and Failure to Pay penalties separately based on your situation. The Failure to File penalty (the larger of the two) is based on how late the return is filed and the amount of unpaid taxes since the original due date (not the extension due date). This penalty is calculated by the following guidelines:

• Beginning at 5% of all unpaid taxes per month, but not exceeding 25% of your unpaid taxes. For example, if you owe $1,000, your maximum penalty will be $250.
• If you both file and pay late, the late filing and late penalties are applied; the IRS reduces your late filing penalty by your late payment penalty, equaling 5% per month.
• After five months, your Failure to File penalty maxes out at 25%, but the Failure to Pay penalty continues until it also reaches 25% of the unpaid taxes.
• After 60 days or two months, the IRS applies the maximum Failure to Pay penalty based on the original return due date as shown in the table below or 100% of the underpayment, whichever is less:

In addition to the late penalties, the IRS also applies interest to unpaid taxes which begins on the due date of the return and accrues until the principal balance, penalties, and interest are all paid in full.

You may be able to reduce or remove a penalty if you have reasonable cause for not being able to pay; you may contact the IRS directly to pursue this option.

Once the e-file deadline passes, it is too late to file taxes online, but it is not too late to file taxes on paper forms and mail them in. Remember that the penalties for not filing a tax return or a tax extension are higher than not paying taxes owed. The penalty for not filing on time is 4.5-5% per month of the tax amount owed, plus interest imposed by the IRS, versus a late payment penalty of 0.5% per month, plus interest. Therefore, it's better to e-file your tax return or a tax extension and pay as much taxes as you can afford than not filing at all.

Keep up with your taxes and use eFile.com to file the necessary forms in the year they are due:

File an extension online via Form 4868 | File your taxes online via Form 1040

You can still file taxes late; if you owe taxes, file as soon as possible. If you are owed a refund, you would not face penalties. Know your rights as a taxpayer when it comes to late tax payments or underpaid taxes.

You may qualify for penalty relief if you can show reasonable cause for why your taxes were unpaid. The IRS may issue an abatement to reduce your penalties; though the IRS does not approve many requests for abatement, you can increase your chances by proving reasonable cause or qualifying for their first-time penalty abatement relief (FTA).

What Is the Highest IRS Penalty?

How much IRS penalties are depends on how much is owed, when the return is filed, and whether or not an extension was filed. On average, you will face a 5% penalty when you do not file a return and owe taxes. This will accrue each month that it is late, up to five months. If you wait until 60 or more days after the due date, then the minimum penalty is either $435 or 100% of the tax that is unpaid, whichever is less. If you file, but do not pay, then only the 0.5% penalty will be assessed, which will increase per month until 25% is reached. See IRS notices you may receive if you do not pay taxes or do not file when you are supposed to.

Instead of owing taxes, balance your withholding with your employer so you do not owe anything at the end of the year. eFile.com offers four W-4 planning tools to balance your withholding: keep more of your money during the year.

Prepare and eFile something even if you can't pay anything. Why? Late filing penalties are generally higher than late payment penalties. Prepare and eFile your next tax return now. Use the eFile.com PENALTYuctor tool below and calculate any penalties or interest you might owe the IRS due to a missed deadline or late payment. This IRS penalty calculator can help you determine your tax penalty for the latest tax years.

Start the PENALTYucator Now

The following sections below have details on IRS late filing and payment penalties. They also have due dates to file tax returns in order to claim tax refunds and what to do if you cannot pay the taxes you owe.

How Long Can You Claim a Tax Refund?

Review the chart below for information on when and how to claim your tax refund. If you owe taxes, file your tax return and submit your tax payment as soon as possible to reduce late filing and payment fees and penalties. You can only claim a tax refund you are owed for three years following the original due date. Once this date has passed, the money goes to the U.S. Treasury. Don't become part of a statistic! File your previous year return as soon as possible. Regardless of if you miss your refund, you should consider filing a previous year return even if you will not get a tax refund. If you owe taxes, you will need to file as soon as possible.

e-Filing is no longer available for past-due returns; use the links in the table to find and fill in all the forms for your previous year tax return. Here at eFile.com, prepare your current year return each year that way you do not have to worry about handling complicated tax forms, making math calculations, and mailing in all your forms. Prepare and e-file your returns on eFile.com and avoid all this hassle and confusion.

All refunds from 2020 and prior year returns have since expired. If you were owed a refund for these years, it has gone to the federal government; if you owed taxes in these years, file and pay as soon as possible.

What Is the Penalty for Filing a Tax Return Late?

If you file your tax return after the deadline and you did not get an extension, then you will be assessed a penalty of 5% of your balance due per month or part of a month a return is filed late (for up to five months). The failure-to-file (FTF) penalty amount will be reduced by the amount you owe for failure to pay (FTP) penalty for any month that both penalties apply. If you file more than 60 days late, your minimum failure to file penalty will be 100% of your unpaid taxes or $435 (whichever is less).

For example, if you owe $100 in taxes for your return, your additional failure to file penalty would be $4.50 per month (reduced from $5.00 due to concurrent failure to pay penalty). However, if you filed your return more than 60 days late, your minimum failure to file penalty is the lesser of 100% of the tax you owe ($100) or $435.

What Is the Penalty for Paying Taxes Owed Late?

If you do not pay the full amount you owe by the tax deadline, even if you file an extension, you will be assessed a penalty of 0.5% of your balance due per month or part of a month after the deadline. The amount of your failure-to-pay penalty will not exceed 25% of your taxes owed.

If you do not pay your full balance due, you will also owe interest on the unpaid amount. The interest rate is set quarterly by the federal government. Get the current interest rates for underpayment of taxes.

Will I Owe Late Filing and Payment Penalties?

Generally, you will owe penalties and interest if you owe taxes and you file and/or pay late. To find out if you may face IRS penalties for late filing and/or late payment, find the scenario below that applies to you:

1. You did NOT file a federal tax return by the April deadline, but you expect a refund.

In general, you will not face penalties, but you must file a return to claim your tax refund. You will have 3 years from the original due date to claim your tax refund. After this date, you can no longer claim it and the money goes to the U.S. Treasury. See information about unclaimed tax refunds.

What Next? Prepare and e-file a tax return through eFile.com as soon as possible and no later than the October 15 deadline. After this deadline, you will need to manually prepare and file your tax return via mail.

2. You DID file a federal tax return on time and you owe unpaid taxes.

You will likely have to pay the failure-to-pay penalty of 0.5% of your balance due for each month (or part of a month) in which your taxes go unpaid past the deadline. The maximum amount of this penalty is 25% of your unpaid taxes.

What Next? Pay some or all of your taxes as soon as possible. If you cannot pay the full amount at one time, you may be able to enter into an installment agreement with the IRS.

3. You did NOT file a federal tax return or an extension on time and you owe unpaid taxes.

You will likely face two types of penalties: one for not filing a tax return or extension on time and one for not paying your taxes on time.

The failure-to-file penalty is 5% of your balance due for every month (or part of a month) in which your taxes go unpaid. The amount you owe for this penalty will be reduced by the amount you owe for the failure to pay penalty. The maximum amount of this penalty is 25% of your unpaid taxes. If you file your tax return more than 60 days late, the minimum failure to file penalty will be 100% of your unpaid taxes or $435, whichever is smaller.

The failure to pay penalty is 0.5% of your balance due for each month (or part of a month) in which your taxes remain unpaid. This penalty will not be more than 25% of your unpaid taxes. If both penalties apply to you during the same month, the failure to file penalty is reduced by 0.5% per month. The 25% cap applies to both penalties together.

What Next? Prepare and e-file a tax return through eFile.com as soon as possible and no later than the October 15 deadline. After this deadline, you will need to manually prepare and file your tax return via mail. Also, pay some or all of your taxes as soon as possible. If you cannot pay the full amount now, you may be able to enter into a payment arrangement with the IRS.

4. You DID file an IRS accepted extension on time and you owe taxes, but you have not paid them.

If you pay at least 90% of your balance due when you get your federal extension, you will not be penalized for late payment. Otherwise, you should expect to have to pay a failure-to-pay penalty of 0.5% of your balance due for each month (or part of a month) in which your taxes go unpaid. The maximum for this penalty is 25% of your unpaid taxes.

You must e-file or file your tax return by the October deadline or you will begin to face the failure to file penalty, which is 5% of your balance due for every month (or part of a month) in which your taxes go unpaid. The amount you owe for this penalty will be reduced by the amount you owe for the failure to pay penalty, if you owe both of them in any month. The amount of the failure to file penalty will not exceed 25% of your balance due, but if you file your tax return more than 60 days after the extended deadline, the minimum failure to file penalty will be 100% of your unpaid taxes or $435, whichever is less.

What Next? Prepare and e-file a your return on eFile.com by the October deadline and pay as much as you can as soon as possible. If you cannot pay the full balance now, you may be able to enter into an IRS installment tax payment plan. If you filed your extension on eFile.com, see how to file your return after your extension was accepted by the IRS.

5. You DID file a tax return or tax extension, but it was rejected and you did NOT file again AND you owe unpaid taxes.

This situation is the same as having filed no tax return at all and you will likely face failure to file penalties and failure to pay penalties as described above.

6. You have a reasonable cause for not filing your tax return or paying your taxes owed on time.

You generally will not have to pay a failure to file or a failure to pay penalty. There are a few scenarios where a taxpayer may receive an extension of time to file:

• Active-duty military stationed outside of the U.S (2 months)
• U.S. Citizen currently abroad (2 months)
• Located in a federally declared disaster area (see the page for time-to-file dates).

7. You DID file an IRS accepted extension on time and you expect a tax refund or owe $0 in taxes.

Whether or not you used eFile.com to prepare and e-file your taxes, your return was accepted and you either owe $0 in taxes or are expecting a refund to come through direct deposit. In this case, you will not face any penalties unless the IRS offsets your refund for any reason. Monitor the status of your refund for an update on this.

What If You Cannot Pay the Taxes or Penalties You Owe?

If you cannot pay at least 90% of the taxes you owe by the original tax deadline, you will likely owe penalties. How can you pay your tax bill when the balance due keeps adding up? Pay your due tax to the best of your financial ability and, at the very least, file your return or extension as soon as possible.

Solution 1: Find Alternate Methods to Pay

For example, if you use a credit card or a loan to pay your tax bill, the interest may be less than the IRS penalties you would face. Options to pay the taxes you owe now.

Solution 2: Apply for a Payment Agreement with the IRS

There are three options to arrange a payment plan with the IRS:

1. Get a short-term extension of time to pay,
2. Enter into an installment plan, OR
3. Make an offer-in-compromise.

The IRS cannot send you to jail and they cannot file criminal charges against you if you fail to pay your taxes. They may, however, pursue those who actively try to evade taxes through illegal means, such as concealing assets or income. These include purposely hiding bank accounts or other records from the IRS or not reporting a side hustle on your taxes.

For those who simply owe taxes and did not pay them on time for any reason, they offer many resources to work with you to pay any debts. See more information about installment plans and other IRS payment options.

Tax planning: Select next year's tax estimator to calculate your upcoming return to see if you may owe taxes.

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