Tax Law

Failure To File Taxes

Key Takeaways:

  • If you don’t file your taxes by the deadline, the IRS can charge penalties for failure to file.
  • Failure to file penalties, failure to pay penalties, and interest will continue to add up until you pay your tax bill.
  • If you need more time to file your taxes, you can get an automatic six-month filing extension.

Failure to file your taxes can increase the amount you have to pay later on. If you don’t file your income taxes, the IRS will start charging penalties and interest on the unpaid tax bill. If you still don’t pay, the IRS can put a tax lien on your property. In some cases, you can face criminal tax evasion charges.

Don’t ignore overdue tax notifications. You should take steps to avoid additional penalties and potential criminal charges. Find an experienced tax lawyer near you for legal advice.

Is There a Penalty for Failure To File Your Taxes?

There are financial penalties if you don’t file taxes. The IRS requires most U.S. citizens and permanent residents working in the U.S. and making more than a certain amount of money to file taxes. If you don’t file, there are late filing penalties, which will increase the amount you owe. The IRS will also continue to add interest to your unpaid tax bill.

Not filing on time will not erase your tax obligations. The penalties and interest will continue to accrue. If you do not file a tax return, the IRS may calculate how much you owe and send you the bill. This may not accurately reflect all of your deductions and tax credits. You may end up with a higher tax bill than if you filed it on time.

When Do You Have to File Federal Income Taxes?

The filing deadline for most taxpayers is April 15 for the prior tax year. However, tax day may be a few days later if it falls on a weekend or holiday. This is the deadline for both filing your taxes and paying your taxes. If you file and the government finds out you owe more money, they may include interest on any tax debt from the April 15 tax deadline.

If you live outside the U.S., you may have an additional two months to file your taxes. Living overseas gives you until June 15 to file your taxes. Servicemembers may have additional time to file if they are serving in an active combat zone.

Can You Get a Filing Extension?

Most tax filers can get an automatic six-month tax extension by e-filing or using IRS tax form 4868. If you request a filing extension, you have until October 15 to file your taxes. However, you still have to pay your estimated taxes by the April 15 due date. An extension doesn’t give you more time to pay your tax bill.

If you underpay on your estimated taxes, you may still owe interest on any unpaid taxes. If you overpaid, you will get a tax refund. For questions about filing an extension, you can ask your tax professional or check your tax preparation program.

How Much Is the Failure to File Penalty?

There are separate penalties for failure to file a federal tax return and failure to pay your taxes. The failure to file penalty adds 5% of the unpaid taxes for each part of a month the return is late. After five months, the penalty maxes out at 25% of your unpaid taxes. Even if you don’t owe much on your taxes, you can still face a minimum penalty.

The failure to pay penalty is 0.5% of the unpaid taxes per month. The failure to pay penalty also maxes out at 25% of your unpaid taxes. In addition to the penalties, the IRS will continue to charge interest.

If you fail to file your state tax return, you may also face additional penalties.

Are There Criminal Penalties for Failure To File? 

Criminal charges are rare for the average American taxpayer who forgets to file their taxes. However, if you are suspected of tax fraud or tax evasion, you can face criminal charges. There is no statute of limitations on how long the federal government can charge you with criminal tax fraud. If you are being investigated for tax fraud, contact an experienced tax law attorney for legal advice.

What Happens if You Don’t Have Money To Pay Your Taxes?

You still have to file your taxes even if you don’t have the money to pay them. If you file your income tax return but don’t pay the back taxes due, the IRS can hit you with penalties. The penalties and interest can add up quickly.

If you are having problems making your tax payments, you can contact the IRS, which can help you with payment options like an installment agreement to pay your taxes over time. If you have a long-term payment plan, the late payment penalties are reduced while you are on the installment plan. In some situations, you may be able to negotiate an Offer in Compromise (OIC). An OIC will allow you to settle your total tax bill for less than the full amount you owe. 

If you have questions about your tax liability, contact an experienced tax law attorney for legal advice.

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