What Happens If You Don't File Your Taxes by April 15?

by Bridget Coila
Tax Season: 1040 U.S. Individual Income Tax Return Form Horizontal top right view of an office laptop background with a metallic pen Tax Time note pad reminder green tree foregrounds - work from home and personal and social distancing - image

Filing a tax return is a necessary task for most U.S. workers every April, but sometimes the amount owed can be staggering. Not filing can leave you owing more than just the initial tax amount, though.

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Does Everyone Have to File a Tax Return?

Most workers in the United States have to file taxes each year with the IRS, but there are a few exceptions. Individuals whose income is less than the standard tax deduction aren't required to file a tax return. Because tax brackets change based on inflation, this amount is different from year to year. For the 2023 tax year, the limit is $13,850 for individual tax filers and $27,700 for married couples filing jointly.

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What Are the Consequences If You Don't File Your Taxes by April 15?

Failing to file a tax return could cause you to incur tax penalties. The IRS charges 5% of the total tax bill for each month the tax return is late. For a tax bill of $200, this would add an extra $10 per month to the total bill. This penalty has a maximum cap of 25% of your tax bill, so it could result in you paying up to 25% more if you delay your filing.

The consequences get worse if you wait more than 60 days to file. At that point, a minimum penalty applies. The minimum penalty for the 2023 tax year is $485 or the full amount of the tax owed, whichever is lower. This penalty is in addition to the taxes you already owe.

If you're owed a refund, no penalties are applied for filing late.

What If You File Your Taxes But Don't Pay What You Owe?

If you don't pay your owed taxes, the IRS charges interest on the unpaid amount and also adds an extra penalty. The penalty amount for failure to pay is one-half of a percent of the total owed each month. So if you owe $200, that would be a penalty of $1 per month added to the tax bill in addition to interest on that $200. There's a maximum cap of 25% of the total tax amount for this penalty.

The interest charged on unpaid taxes is based on the current federal interest rate.

If you end up with both a failure to file penalty and a failure to pay penalty, the IRS reduces the amount of the failure to file penalty by the amount of the failure to pay penalty during any month in which you owe both. For a tax bill of $200, this would mean that the penalty for failure to pay would remain $1 per month but the penalty for failure to file would be $9 instead of $10 per month.

Is There a Grace Period?

If you know you can't file your federal tax return by the deadline, you can file for an extension. This gives you an extra six months to file. If you owe the IRS money, you'll still be charged interest based on the original April filing date.

If you file on time electronically but your tax form gets rejected, you have five days to resubmit before any penalties are applied. Paper filers have 10 days to resubmit their forms.

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What Can You Do If You Can't Afford to Pay Your Taxes?

If you can't afford to pay your taxes on time, you can apply for an installment plan. Apply at the time of filing by submitting Form 9465, the Installment Agreement Request form, along with your regular tax return.

If paying taxes would cause you and your family to become unable to support basic living expenses, you may be eligible for the IRS Hardship program. This option halts collection on taxes owed, but you still owe the money once your situation improves and the IRS deems you able to afford the tax bill.

It's a good idea to pay as much as you can when you file. This helps reduce any penalties and interest, making your overall tax bill lower. Even if you can't pay right away, you should file your tax return because the penalties for not filing are much higher than those for not paying.

If you don't pay your taxes and fail to file for an extension or hardship, the IRS can take action to collect the money. Your wages could be garnished, which means the IRS takes a portion of your paycheck to put toward your tax debt. The IRS could also put a lien on your property, such as your home, or take money directly from your bank account to pay the owed taxes.

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The eLocal Editorial Team operates independently of eLocal USA's marketing and sales decisions.

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