Here’s How Much a Late Tax Return Might Cost You

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Late tax returns can lead to costly penalties in some situations. Here’s what you need to know before the tax deadline arrives. [[{“value”:”

I’ve yet to meet a person who lists filing taxes among their favorite pastimes, but it’s in most Americans’ best interests to do it anyway. The deadline to file your 2023 taxes is April 15, 2024, so you’ve still got time. But you probably don’t want to put it off too much longer.

There are steep penalties for failing to file your return on time. But fortunately, they are avoidable in certain circumstances.

What happens if you don’t file your tax return?

There’s a chance that nothing serious will happen to you if you don’t file your tax return if your income during the year was less than the standard deduction for your filing status. The table below can help you figure out what yours is for the 2023 tax season:

However, even in this situation, you may still need to file a return if you had any self-employment income or owe estimated taxes or alternative minimum tax (AMT). You also need to file a return if you hope to claim certain refundable tax credits, like the Earned Income Tax Credit (EITC).

You can also get away without filing a return if you’re due a refund. But again, you won’t get the money you’re owed back unless you do. So it’s usually worth it to submit your return anyway.

If you owe the IRS and don’t submit a return, you’ll pay a failure to file penalty of 5% of your unpaid taxes per month, up to a maximum of 25% of the taxes you owe. You’ll also face a failure to pay penalty of 0.5% of the amount unpaid per month, up to a maximum of 25%.

The IRS might also decide to come after you for tax evasion. In the worst cases, this could result in hefty fines — sometimes six figures or more — and even prison time.

How to avoid penalties for not filing your tax return

The best way to avoid any negative consequences for failing to file your tax return is to file it by the deadline. You can do it yourself with tax software or enlist the help of a qualified tax professional in your area.

If you can’t file your taxes by April 15, you may request an extension. This gives you an additional six months to file your return. But it doesn’t give you an extension to pay any taxes due. So you won’t have to worry about the failure to file penalty if you do this. However, if you owe the IRS money, you will still incur the failure to pay penalty.

Don’t delay filing even if you’re worried you have a tax bill you cannot afford. The IRS has several payment plan options to help taxpayers who cannot pay their bills in a lump sum. Explore these options and consult a tax professional if need be to determine the best way to pay your taxes.

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