I Asked ChatGPT What Happens If You File Your Taxes Late — Here’s What It Said
Written by
Jacob Wade
Edited by
Zuri Anderson
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If you’re worried about missing the tax deadline, it can be stressful. What will happen? How much will I owe? Will the IRS take me to jail?
I wanted some concrete answers on what ACTUALLY happens if you file late. So I asked ChatGPT a simple question: What actually happens if you file your taxes late?
Here’s what it said (broken down into five key areas).
1. The Failure-To-File Penalty Adds Up Fast
The IRS “failure-to-file” penalty charges 5% of your unpaid taxes per month, up to a maximum of 25%. If you owe taxes and miss the filing deadline, the penalties grow quickly.
For example; If you owe $10,000 to the IRS and miss the filing deadline, you’ll pay a $500 penalty after just one month. If you put it off for another four months, you could owe $2,500 in penalties alone.
Note: The penalty for filing late is significantly higher than the penalty for paying late. So even if you can’t afford to pay, filing on time can save you some money.
2. Interest Starts Accruing Immediately
While penalties are steep, the IRS also charges interest on unpaid taxes. If you owe money to the IRS and you don’t pay or file on time, interest starts accruing daily from the due date until your balance is paid in full.
Ouch!
Interest is charged on the taxes owed, but could even apply to the penalty balances, as well. This can get expensive quickly.
3. You Could Lose Your Refund
Here’s something most people don’t know: If you are owed a refund, there’s no penalty for filing your taxes late. But, there is a deadline on claiming your refund.
The IRS gives you three years from the original due date to file your return and claim your refund. If you fail to file your taxes within that time frame, your money becomes property of the U.S. Treasury.
4. Collection Actions Can Escalate
If you don’t file your tax return and ignore paying the IRS for too long, the IRS will begin collection efforts.
The IRS has nearly unlimited power to collect money from you, including tax liens, levies on your bank accounts or even wage garnishment straight from your paycheck. And sometimes, unpaid IRS tax debt can affect your ability to obtain loans or refinance your home.
Collections usually don’t begin until after the IRS sends several notices.
5. Payment Plans Are Usually an Option
Chat GPT was quick to point out that the IRS can actually be reasonable, and may offer payment plans to help you get caught up on your tax debts.
Installment agreements allow you to pay over time based on your income and the amount you owe. In some cases, taxpayers may even qualify for penalty relief or an Offer in Compromise to settle your IRS debt for less than you owe.
But it’s important to file your return on time, even if you owe. These options are more readily available to on-time filers.
A Quick Word of Caution About AI Advice
ChatGPT can provide general information, but it is not a tax professional. Tax rules change, and your situation may be unique. Before making decisions about filing late, payment plans or penalties, consider consulting a certified public accountant (CPA), enrolled agent or qualified tax advisor.
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