What Happens If You Don’t File Taxes? Penalties, Refunds and What To Do Next
Written by
Ana Gotter
Edited by
Elizabeth Constantineau, CFHC™
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Missing the tax deadline creates problems that compound quickly. If you don’t file, you’ll face penalties starting at 5% of unpaid taxes per month, potential Internal Revenue Service (IRS) collection actions and even criminal charges in severe cases.
Learn more about what happens if you don’t file your taxes on time and what your options are if you can’t afford to pay what you owe right now.
Quick Take
- Not filing when you owe taxes will trigger a monthly penalty of 5% to 25% — plus 0.5% monthly failure-to-pay penalty.
- If you’re due a refund, you have three years to file and claim it with no penalty.
- The IRS can file a substitute for return (SFR) on your behalf, usually resulting in a higher tax bill.
- Beyond 60 days late, the minimum penalty is $525 or 100% of the unpaid tax, whichever is less.
- Filing late is always better than not filing at all, even if you can’t pay.
- Payment plans and hardship options exist if you can’t afford what you owe.
Do You Need To File a Tax Return?
Not everyone needs to file. Your requirement depends on your income, age and filing status. For tax year 2025, the IRS generally requires you to file if your income meets or exceeds the amounts below:
| Filing Status | Income |
|---|---|
| Single under 65 | $15,750 |
| Single 65 or older | $17,550 |
| Married filing jointly, both under 65 | $31,500 |
| Married filing jointly, one 65 or older | $33,100 |
| Married filing jointly, both 65 or older | $34,700 |
| Married filing separately | $5 or more |
| Head of household under 65 | $23,625 |
| Head of household 65 or older | $25,625 |
| Self-employed | Over $400 in net earnings |
Good To Know
Gross income is everything you earned before deductions.
Taxable income is what remains after deductions. You file based on gross income thresholds, but pay taxes on taxable income.
Signs You Need To File a Tax Return
You most likely need to file if you:
- Earned more than your filing threshold.
- Had net self-employment income of $400 or more.
- Owe special taxes — alternative minimum tax (AMT), retirement account penalties, etc.
- Received health savings account (HSA) or Archer medical savings account (MSA) distributions.
- Owe Social Security or Medicare tax on unreported tips.
- Received advance premium tax credits.
Not Filing vs. Not Paying: What’s the Difference?
Understanding this distinction matters because the penalties differ significantly:
| Scenario | What Happens | Penalty Rate |
|---|---|---|
| Don’t file | You didn’t submit a tax return by the deadline | 5% of unpaid taxes per month, max of 25% |
| File but don’t pay | You submitted your return but didn’t pay what you owe | 0.5% of unpaid taxes per month, max of 25% |
The failure-to-file penalty is 10 times steeper than failure-to-pay. This makes filing on time — even without payment — key for minimizing financial damage.
What Happens If You Don’t File and You Owe Taxes?
When you don’t file and owe money, penalties and interest accumulate immediately.
Penalties
There are steep penalties if you don’t file your taxes when you owe a balance. These include:
- Failure-to-file penalty: The IRS charges 5% of your unpaid taxes for each month your return is late, maxing out at 25% after five months. If you owe $10,000 and file three months late, that’s an additional $1,500.
- Failure-to-pay penalty: The IRS also assesses 0.5% of unpaid taxes monthly, capping at 25%.
- When both apply: If you neither file nor pay, the combined rate is 5% per month for the first five months. After that, only the failure-to-pay penalty continues.
- Minimum penalty after 60 days: If your return is more than 60 days late, the minimum penalty is $525 — for returns due in 2026 — or 100% of the unpaid tax, whichever is less.
Interest Charges
The IRS charges approximately 7% annual interest, compounded daily, from the original due date until you pay in full. Unlike penalties, interest is rarely waived.
What Happens If You Don’t File and You’re Due a Refund?
If the IRS owes you money, you won’t face penalties for filing late. However, you have only three years from the original filing deadline to claim your refund. After that, it goes to the U.S. Treasury and you lose it permanently.
For tax year 2025, you must file by April 15, 2029 — or Oct. 15, 2029, with an extension — to claim your refund.
Beyond Penalties: What the IRS Can Do If You Don’t File for Long Enough
Ignoring the IRS doesn’t make your tax obligation disappear. The agency has powerful collection tools.
Substitute for Return
If you don’t file for several years, the IRS may file a return on your behalf using income information from W-2s and 1099s. The problem: SFRs use the least favorable filing status, claim no dependents, and don’t include deductions or tax credits. This almost always results in a higher tax bill.
You’ll receive a Notice of Deficiency (CP3219N) that shows what the IRS thinks you owe. You have 90 days to respond by filing your own return or petitioning the Tax Court.
Collections Tools
Once the IRS assesses your tax debt, it can:
- Issue federal tax liens against your property.
- Levy your bank accounts, seizing funds directly.
- Garnish your wages, taking money from each paycheck.
- Seize your assets, including vehicles and real estate.
- Offset future tax refunds to pay old debts.
Criminal Charges
While rare, the IRS can pursue criminal charges for willful failure to file, which is when you deliberately and intentionally avoid filing instead of simply forgetting.
- Willfully failing to file is a misdemeanor punishable by up to one year in prison and $25,000 in fines per unfiled return.
- Tax evasion charges carry felony penalties of up to five years and $100,000 in fines.
The IRS reserves criminal prosecution for egregious cases involving substantial unpaid taxes or intentional fraud.
Timeline: What Happens Over Time If You Don’t File
If you don’t file, you may face graver consequences over time.
| Time Since Deadline | What Happens | What You Should Do |
|---|---|---|
| 1 to 30 days | Failure-to-file penalty starts at 5% | -File immediately -Request payment plan if needed |
| 60 days | Minimum $525 penalty kicks in | -File now before penalties grow |
| 3 to 6 months | Failure-to-file penalty maxes at 25% | -Respond to notices -Set up payment arrangement |
| 6 to 12 months | Aggressive collection notices, SFR preparation | -File all missing returns -Consider offer in compromise (OIC) |
| 12 months or more | IRS may file SFR, liens possible | -File correct returns to replace SFR -Get professional help |
| 3 years | Refund deadline passes | -File immediately if due a refund |
What To Do If You Missed the Deadline
If you missed the deadline to file, there are steps you can take right now:
- Gather your tax documents: Collect W-2s, 1099s and deduction receipts. Request transcripts from the IRS if you’re missing documents.
- Determine which years to file: The IRS typically requires six years of back returns before considering payment arrangements.
- Prepare accurate returns: Claim all deductions and credits you’re entitled to.
- File all missing returns: Submit returns for all missing years, starting with the most recent.
- Pay what you can: Even partial payment shows good faith and reduces interest.
- Set up a payment plan: Contact the IRS to establish an installment agreement if you can’t pay in full.
- Respond to all IRS notices: Address them promptly, even if you can’t pay yet.
If You Can’t Pay the IRS Right Now, Here Are Your Options
If you can’t pay the IRS right now, you have several options available.
Filing Extension
Tax extensions give you until October 15 to file, but don’t extend your payment deadline. You must still pay estimated taxes by April 15 to avoid failure-to-pay penalties.
IRS Payment Plan
The failure-to-pay penalty drops to 0.25% per month during an approved plan.
- Short-term plans: These plans are up to 120 days and have no setup fee.
- Long-term plans: These go up to 72 months and charge $31 to $225, depending on payment method.
Offer in Compromise
An offer in compromise lets you settle your debt for less than the full amount if you can prove inability to pay or financial hardship. The IRS accepts only about 30% to 40% of offers.
Temporary Hardship
If you’re experiencing severe financial hardship, the IRS may temporarily halt collections while you recover. However, your debt remains and interest continues accruing.
Common Myths About Not Filing Taxes
- Myth: If you don’t make enough money, you don’t need to file.
- Reality: Self-employment income of $400 or more requires filing regardless of total earnings.
- Myth: The IRS won’t notice if you skip one year.
- Reality: The IRS receives copies of all W-2s and 1099s and systematically identifies nonfilers.
- Myth: Extensions give you more time to pay.
- Reality: Extensions delay filing, not payment deadlines.
- Myth: Not filing is better than filing if you can’t pay.
- Reality: Not filing triggers penalties 10 times higher than not paying.
Filing Late vs. Not Filing at All: Key Differences
While you certainly don’t want to file late if you can help it, it’s better to file your taxes late than not at all.
| Factor | Filing Late | Not Filing at All |
|---|---|---|
| Penalties | 0.5% per month — if filed but not paid | 5% per month for first 5 months, plus 0.5% ongoing |
| Refund eligibility | Yes, within 3 years | Forfeit refund after 3 years |
| IRS enforcement risk | Lower, shows good faith | Higher, triggers aggressive collections |
| Stress level | Manageable, as debt is known | High, uncertainty about what you owe |
Final Takeaway
- File even if you can’t pay, as the penalties for not filing are much worse than filing and not being able to pay what you owe.
- The sooner you file, the less you’ll owe in penalties and interest if you do file late.
- The IRS offers payment plans and hardship programs if you can’t pay.
- Criminal charges are rare but possible for willful, long-term nonfiling.
- If you’re due a refund, file within three years or lose it forever.
Tax Filing FAQ
Still have questions? Here’s what happens if you don’t file taxes, file late or owe the IRS.- What happens if I don't file taxes, but I don't owe anything?
- You won't face penalties for not filing. However, if you're due a refund, you must file within three years of the original deadline or lose it permanently.
- What happens if I don't file taxes and I owe money?
- You'll face a monthly failure-to-file penalty of 5% to 25% — plus 0.5% monthly failure-to-pay penalty. This will also come with daily compounding interest at approximately 7%. The IRS can pursue liens, levies and wage garnishment.
- Can I still get a refund if I file late?
- Yes, as long as you file within three years of the original deadline. If you file after three years, you could lose the refund. There's no penalty for filing late when you're due a refund.
- How long do I have to file to claim a refund?
- You have three years from the original filing deadline. For example, for tax year 2025 returns — normally due April 15, 2026 — you have until April 15, 2029, to file and claim your refund.
- What's the penalty for not filing taxes?
- The failure-to-file penalty is 5% of unpaid taxes for each month your return is late, maxing out at 25% after five months. If your return is more than 60 days late, the minimum penalty is $525 or 100% of the unpaid tax, whichever is less.
- What if I can't afford to pay what I owe?
- If you can't afford to pay what you owe, file anyway. This helps you avoid the steep failure-to-file penalty. Then, set up a payment plan with the IRS, request temporary hardship status or explore an OIC.
- Is it better to file an extension or file late?
- Always file an extension before the deadline if you need more time. Extensions prevent failure-to-file penalties, but don't extend your payment deadline. Filing late without an extension triggers immediate penalties, so you want to avoid it if possible.
Angela Mae, Caitlyn Moorhead and Michael Keenan contributed to the reporting for this article.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
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