What Happens If I Don't File My Taxes? (2024)

Though some Americans with low income are technically not required to file tax returns, the IRS generally expects you to submit a return if you meet the earnings criteria.

If you’re supposed to file a 2023 tax return but don’t, the consequences can be costly. The IRS may charge you penalties and interest for each month you go without filing and paying the taxes due.

Additionally, if you don’t file a return within three years of the due date, you may forfeit any refund you’re owed.

Can You File Your Taxes Late?

If you miss the annual tax deadline, which falls on Monday, April 15, 2024 (or October 15, if you file a valid extension), you can still go ahead and submit your return.

But if you haven’t filed in several years, the IRS will generally require you to file six years’ worth of back tax returns to be in good standing.

What Happens If I File My Taxes Late?

Filing a tax return late may bring risks that go beyond missing out on an unclaimed tax refund. Here are three of them.

1. Failure-To-File Penalty

If you don’t file your tax return in a timely manner, the IRS may assess a failure-to-file penalty. The size of the penalty is based on the amount of any unpaid taxes and how late the return is.

“Unpaid tax” is the tax balance shown on your federal income tax return, minus any payments you made during the year, such as through tax withholdingfrom your paycheck.

The failure-to-file penalty amounts to 5% of the unpaid tax for each month or partial month the tax return is late. The IRS limits its penalty to 25% of the unpaid tax amount, but will charge interest on the penalty.

2. Failure-To-Pay Penalty

A failure-to-pay penalty applies if you’ve filed a tax return but haven’t paid the tax reported there by the due date or an approved extended due date. The penalty is calculated as a percentage of the taxes you didn’t pay. It’s 0.5% of your unpaid taxes for each month or partial month the balance goes unpaid.

Again, the maximum penalty the IRS can charge is 25% of your unpaid taxes. The IRS charges interest on this penalty, too.

If you’re required to pay both a failure-to-file penalty and a failure-to-pay penalty in the same month, the IRS reduces the amount you owe. The combined penalty comes out to 5% for each month or part of a month your return was late.

For example, instead of hitting you with a 5% failure-to-file penalty for a month, the IRS will charge a 4.5% failure-to-file penalty and a 0.5% failure-to-pay penalty, for a total of 5% of your unpaid taxes.

3. Substitute Tax Return

In some instances, if you fail to submit a tax return, the IRS may file what’s known as a “substitute for return” on your behalf. The IRS will use third-party income information, such as W-2 tax forms and 1099 forms, to create the return, but the agency won’t include tax deductions and credits you may be entitled to.

If the IRS does file a substitute for return on your behalf, you’ll have 90 days to submit any past-due returns or file a petition with the U.S. Tax Court. If you don’t take any action within 90 days, the IRS will proceed according to the substitute and charge you for the tax shown there.

What Happens If You Don’t File Your Taxes But Also Don’t Owe Anything?

If you don’t file a tax return because you don’t expect to owe taxes, you generally won’t face any penalties—but you should still consider filing. Tax returns are often required to finance a home or request education financial aid or federal assistance.

In some cases, if you don’t file a return, the IRS may generate a “substitute for return” on your behalf. If that happens, the IRS won’t report any tax deductions or credits you may be entitled to—so you may wind up owing more taxes than you otherwise would have.

For this reason, you should consider filing even if you don’t expect to owe.

What Happens If You Don’t Pay Taxes?

If you don’t pay your taxes, you may face penalties and interest. You may also face IRS collection actions, such as a tax levy or lien.

What If I Can’t Afford To Pay Taxes?

If you haven’t filed a return because you’re financially unable to pay your taxes, you’re better off filing a return, paying what you can and contacting the IRS to make an arrangement for the unpaid balance. The IRS provides these payment options:

• Short-term payment plans: These give you 180 days to pay your bill in full.
• Installment agreements: These allow you to make monthly payments over a longer period of time.
• An “offer in compromise”: This is an agreement with the IRS that could reduce your tax debt. You have to apply to the IRS with a proposal to pay an amount that you can afford without financial hardship; the agency will accept or reject your offer.
• “Currently not collectible” status: This designation means the IRS may give you a respite. If you can’t pay both your living expenses and your tax bill, the agency will suspend some collection actions, such as levies on your assets or income. Interest and penalties will continue to pile up, though.

No matter why you haven’t filed, it’s always in your best interest to do so as soon as you can. Filing past-due tax returns can limit the amount of interest and penalties you may owe and ensures you’ll receive any refunds that are due you.

How Long Can You Go Without Filing Taxes?

There is no statute of limitations on unfiled tax returns, but you’ll want to file as soon as you can to minimize any penalties.

If you’re not sure if you’re required to file for a particular tax year, you’ll need to find out the filing income requirement for that year. You can do so by reviewing Publication 17, “Your Federal Income Tax,”for the tax year in question.

How Late Can You Receive a Tax Refund?

The IRS typically allows you to claim a refund by submitting a return within three years of its due date. If you don’t file within that time frame, you’re likely to lose out on your refund.

For example, let’s say you never filed your 2021 tax return, which was due April 18, 2022. If you’re likely to receive a refund for 2021 but don’t file that year’s tax return by April 18, 2025, you’ll forfeit the money.

Before you file a late return, check out our top picks for the best tax software to help you get the job done.