What Is the Penalty for Filing Taxes Late?

When you’re late filing taxes without filing for an extension, you could end up paying penalties or interest to the IRS. Penalties for filing taxes late can add up quickly, so it’s in your best interest to file on time, file as soon as possible, or file for an extension before the deadline.

What Happens if You File Your Taxes Late?

Anyone who doesn’t file taxes on time may be held liable for failure to file and/or pay penalties. 

When you miss the tax filing deadline, which is typically April 15, the IRS will send a letter or notice through the mail to notify you of the missed deadline and possible consequences. However, if you’re confident that you do not have any tax liability and are owed a refund, the IRS does not penalize taxpayers for filing taxes late who are owed a refund. 

For filing states taxes late, check with your state tax agency to learn more about deadlines and penalties for filing taxes late.

What's the Penalty for Filing Taxes Late?

The failure-to-file penalty is usually 5% of the tax you owe each month your tax return is late. The penalty won’t exceed 25% of your unpaid taxes. If you’re also late to pay any owed taxes, the combined penalty is 5% (4.5% late filing and 0.5% late payment) for each month that your return was late, up to 25%.

After 60 days, the failure-to-file penalty maxes out. The minimum failure-to-file penalty is $435 or the tax you owe, whichever is smaller. The maximum total penalty for failure to file and pay is 47.5% (22.5% late filing and 25% late payment) of the tax you owe. While the failure-to-file penalty maxes out, the failure-to-pay penalty continues until the tax is paid, up to 25%.

Avoiding an IRS Penalty

The best way to avoid an IRS penalty is to pay your taxes on time. If you’re unable to pay before the deadline, you can file for an extension. To file an extension, you can fill out IRS Form 4868 which gives you until October 15 to file a return. 

Here are a few things to keep in mind if you are considering an extension:

• An extension to file does not grant you any extension to pay your taxes
• You should pay any taxes owed by the deadline to avoid possible penalties
• Your late file extension request is due no later than the regular due date of your tax return.

If you owe taxes, it’s best to pay your balance as soon as possible as penalties and interest may accrue. If you are unable to pay the balance, you can contact the IRS to set up an installment agreement. 

It’s also possible to have the IRS late filing penalty abated; however, you must call or write to the IRS. You may be able to have the penalty removed if you’ve had no previous penalties charged within the last three years. First-time abatement is available for both failure to file and failure to pay penalties.