What Happens if You File Taxes Late? Here is the Good News and Bad

The reality is, filing taxes late can have serious consequences, and what happens if you file taxes late largely depends on whether or not you owe the IRS money—or you’re even required to file (more on that later). If you owe them money, then what will happen is that the IRS will send you a notice asking for payment and detail the penalties and interest you owe with an explanation of what those fees are.

The IRS has various options available to collect what they’re owed, such as levying wages or seizing property, and in some cases, interest rates can be up to 30%. You’ll want to avoid all this by filing your taxes on time (even early!).

What is a Tax Return? A tax return is an annual federal financial report that assembles and reports tax payments, tax deductions, credits, and income received for money earned during the prior calendar year (or tax year).

Do I Need to File a Return?

That’s right. The IRS may not require you to file an individual tax return (Form 1040), depending on three specific criteria you must meet (usually): – Your Age – Filing Status – Gross Income

What Happens If You Don’t File Taxes?

We know when you need to file (mostly) based on the above discussion. Now, if you still aren’t convinced filing a return is the right move, I’ll really need to lean in and hammer home the fear because not filing a return will get costly and fast.

1. Penalties and Interest

First things first. You’re going to get hit with penalties and interest. If you didn’t expect that right off the bat, you don’t know the federal government. These disincentives usually are enough to entice most to file a return without a fight.

3. The IRS Will Begin the Collections Process This one is a baddy. The IRS will come after you for money they think you owe them. They’ve got a war chest of ways to extract what you owe: wage garnishment, levy money directly from your bank accounts, or even placing a federal lien against your property. Just file your return and pay what you owe. And even if you can’t pay what you owe on tax day, you’ve got options!

What Should I Do If I Can’t Pay My Tax Bill? People who are in a position to pay their taxes should make payments as they go. That means that you are showing people that you are acting in good faith to pay what you owe, and this will also lower the amount of money you would have to pay (that’s how paying bills works!). If you can’t manage this, you still have some other options strongly worth considering.

If you can pay the full amount now, you can use an electronic funds transfer or even pay with a credit or debit card. Granted, don’t forget that you will also owe interest charges if you carry a balance on your credit card.

If you need more time to repay your unpaid tax balance, you can file a request for an extension and then apply for an extension. There are different costs tied to establishing an installment plan. A formula exists that considers your particular circumstances (such as debt, the time frame needed to repay, etc.) and determines the cost.

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