What Happens if You File Your Taxes Late?
With just a few days left before taxes are due, I thought it would be worth talking about what happens if you miss the deadline and wind up filing late. The short answer is that you run the risk of penalties and interest, and failing to file on time is much worse than failing to pay on time. For more details, read on…
Enforcing the filing deadline
For starters, rumor has it that the IRS doesn’t bother checking postmarks for returns that are just a couple days late, so you might be okay. The problem is that there is a lot of variation inherent in the US Postal Service, and they’ll also be receiving millions (and millions) of last minute returns. Thus, as long as your return is close to being on time, they might not even notice.
I can’t speak for the actual filing deadline, as I’ve never rolled the dice on that one, but I’ve certainly found this to be true for quarterly tax deadlines. On more than one occasion in the past, I’ve mailed our quarterly payments a day or two late and I’ve never heard back from the IRS about it. It might be that they didn’t notice, or perhaps they realized that it was more costly to print and mail a notice than it was to just let it slide.
But if you do file late – and the IRS catches you – the interest and penalties will accrue from the actual due date through the postmark date. So… What if you file (or pay) late, and you get caught?
Penalties for filing and/or paying late
As it turns out, the penalty for “failure to file” is much steeper than the penalty for a late payment. Thus, if you can’t afford the amount due, you should still file your return (or request a filing extension) in a timely manner and then explore alternative payment options.
To be a bit more specific, the penalty for late payment is typically 0.5% of your unpaid taxes per month (or portion thereof) after the deadline that your taxes go unpaid. This penalty can wind up being as much as 25% of your total amount due, so don’t let it slide any longer than absolutely necessary.
In contrast, the penalty for filing your return late is typically a whopping 5% of your unpaid taxes per month (or portion thereof) after the deadline that they receive your return, topping out at 25%. And if you file more than 60 days late, the minimum penalty is the smaller of $135 or 100% of the taxes that you owe.
Keep in mind that, as long as you request an extension and pay in at least 90% of your actual tax liability by the original due date (including withholding and estimated payments), you’ll avoid any underpayment penalties as long as the balance if paid no later than the extended due date.
(More on penalties from IRS.gov: link)
What if you’re expecting a refund?
If you’re expecting a refund there’s actually no need to file on time. As I’ve detailed above, all penalties and interest are based on your unpaid balance. If you don’t owe a dime, the penalties will add up to a whopping zero dollars. Thus, as I’ve detailed elsewhere, if you’re expecting a refund, you may not have to file on time.
Of course, if the IRS owes you money, you should do whatever you can to collect it as quickly as possible. And keep in mind that the IRS statute of limitations runs out after three years so, whatever you do, make sure you claim your refund within that timeframe or you’ll forfeit the money that you are due.
P.S. If you need more time to finish your taxes, don’t forget to request a state income tax filing extension in addition to your federal extension.
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Modified on April 18th, 2011 - 7 Comments
Filed under: Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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» Can You File Your Taxes Late if You Don’t Owe?» Filing Taxes After the Deadline
» Getting a Refund? No Need to File on Time
» Important 2007 Tax Filing Deadlines
» Filing an Income Tax Extension
» Paying Estimated Taxes Late, Take Two
» Penalty for Paying Quarterly Estimated Tax Payments Late
» Important 2011 Tax Filing Deadlines
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April 15th, 2011 at 1:02 pm
The IRS just cares that you pay them at all – not really if you pay when they say you should pay.
My wife works for herself and we are REQUIRED to file quarterly taxes. However, we have not for the last 10 years. I have extra taxes taken from my wages and I have never heard a peep from the IRS.
We always get a refund so I feel I doing nothing unethical.
April 15th, 2011 at 1:23 pm
“pay in at least 90% of your actual tax liability by the original due date (including withholding and estimated payments)”
This is INCORRECT. Consumerism Commentary made the same error in their similar post. 90% is the amount you must have withheld during the year to avoid an underwithholding penalty. Taxes are due on April 15th (or the next business day) regardless of getting an extension to file!
April 16th, 2011 at 11:34 pm
David M: You are only “required” to pay quarterly taxes if you would otherwise owe more than $1000 on April 15. If you are having extra withholding done, that is just as good. Those quarterly payments are estimates, not tax returns, and that’s why the IRS is somewhat loose about the date on which they arrive. If they don’t arrive at all, the IRS assumes you have determined that they will be getting enough money some other way.
May 1st, 2012 at 1:26 am
I just found my tax forms my accountant completed on March 10, 2012 for me. I must have inadvertently put them under some papers and forgot to mail them, until today. I owed nothing, as I am basically semi-retired and expecting a refund. Will this be a problem?… will I be penalized for this? I have never been late before, nor had a zero balance to pay the government, but to receive a small refund. I am totally amazed I forgot to mail them, but will today. Thanks. Sylvia
May 1st, 2012 at 12:38 pm
Sylvia: Penalties for filing late are calculated as a percentage of what you owe, so if you don’t owe anything, your penalty should be $0.
May 1st, 2012 at 4:35 pm
I FILED LATE & HAD ISSUES WITH LAST 1/4 OF 2004
S CORP TAXES SO I FILED 04,05,06,07,08,09,10 IN 2011 I FILED 2012 THIS YEAR ALL YEARS I HAD A REFUND ON MY JOINT 1040 WITH MT WIFE. INN 2004 ,05,06 WE HAD 6720.00 HELD BACK BECAUSE OF STATUE OF LIMITATIONS (3 YRS. ) I NOW HAVE PENALTY’S AND INTEREST FOR 1120S LATE FILINGS FOR 2009 & 2010. I HAVE CASHED MY IRA, HOUSE GOING INTO FORCLOSURE WIFE S INCOME CUT BY 30,000 AND MY BUSINESS IS GOING UNDER.through OUT THIS WHOLE PROCESS HAVEN’TNT OWED ANY TAXES
BUT COULDN’T GET PROPER OGANIZATIONON/ REPRESENTATION TO FILL OUT.CAN’T THE IRS BE HAPPY THEY HAVE 6,720.00 OF MY MONEY OR DO THEY GET TO HAVE THEIR CAKE AN EAT IT TOO. IF SO HOW MUCH CAN I COLLECT OF FOOD STAMPS AS I HAVE JUST ABOUT HAD IT WITH THE SYSTEM.
June 18th, 2012 at 9:27 pm
I have an s corporation that I closed due to moves and such ( moved to 3 different states in 2010 and 3 times in 2011 because of my husbands work). When i filed my taxes in Feb 2010 hr block submitted my persnal taxes online but i forgot to mail my 1120 form for my s corporation because I was in the middle of a move a forgot like an idiot! I paid the taxes owed to the IRS for the 2009 taxes. I just found out that I never sent the 1120 form so I just mailed it to the IRS. Would I be penalized (I’m sure I will but how much will they charge me ? I am freaking out!!!