These Are the Penalties for Filing Taxes Late

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Penalties for filing taxes late are deliberately set high enough to encourage taxpayers to file in a timely manner. On top of that, the IRS can impose additional penalties and interest to any unpaid taxes, increasing your bill even further.

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It’s important to make an effort to file your taxes on time or file for a tax extension. Either way, make sure you know the penalties you might face and seek help for filing taxes late.

Penalties for Filing Your Taxes Late

Taxpayers who do not file their taxes on time are subject to a failure-to-file penalty. In addition, taxpayers who file taxes on time but do not pay the taxes they owe will also be fined. Here are a few penalties for being late on your taxes.

How Much You’ll Owe for Filing or Paying Your Taxes Late

The penalty for not filing on time depends on how late your return is. The fine for filing up to 60 days late can be as much as 5% of your unpaid taxes each month or part of a month that you are late, up to 25%. After 60 days, the IRS imposes a minimum penalty of $435 or 100% of the unpaid tax, whichever is less. Taxpayers owed a refund won’t be charged a fee for filing late.

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The failure-to-pay penalty is 0.50% each month your IRS payment is late, up to 25%, according to the IRS. But the failure-to-file penalty can be reduced to 0.25% if the taxpayer files a return and requests an installment IRS payment plan to repay their debt in full.

If both the failure-to-file penalty and failure-to-pay penalty apply in the same month, the maximum amount charged for both penalties is 5% per month. Taxpayers can avoid these late filing penalties by filing on time or filling out the appropriate paperwork for a tax extension. But keep in mind, you must request the extension by the tax due date and you must have paid 90% of your tax bill to avoid a failure-to-pay penalty.

Paying Back Interest on Unpaid Taxes

For a taxpayer who owes unpaid taxes, interest will accrue on the amount owed in addition to the penalties covered earlier. This interest penalty compounds daily and is charged at a rate equal to the federal short-term rate plus 3%.

As an example, consider a taxpayer who fails to file their 2021 taxes when due on April 18. Assume the taxpayer files his taxes on May 18 and owes the IRS $2,000:

  1. This taxpayer will be assessed a failure-to-file penalty of 5% for each month.
  2. Next, a failure-to-pay penalty will be assessed at 0.50% each month, including the partial month of June.
  3. Last, interest will accrue on the unpaid taxes and compound daily, at a rate of 3% above the federal short-term rate, beginning the day after taxes were due.
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If the taxpayer doesn’t file until June 18, which is more than 60 days late, his failure-to-file penalty will be $435 — $435 being the lesser of that minimum or 100% of the tax owed.

How To Avoid a Penalty for Filing Taxes Late

The IRS allows taxpayers a filing extension until Oct. 15, and all individual taxpayers can use Free File to request it. The alternative is to print and mail in Form 4868.

During this extension, the taxpayer will not incur a failure-to-file penalty. However, the failure-to-pay penalty and interest on unpaid taxes might still be charged. Even if you are granted an extension to file your taxes, you still need to pay your taxes on time.

Is There a Penalty for Filing Taxes Late If I Owe Nothing?

At the same time, there is no IRS penalty for filing late if you expect to receive a tax refund. In fact, no extension is required under this circumstance.

When Are Taxes Due in 2022?

The last day to file taxes is typically April 15, unless this date falls on a weekend or holiday–which this year it does. Therefore this year, the tax deadline is April 18 because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers those states have until April 19 to file their returns due to the Patriots’ Day holiday.

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Taxpayers needing an extension will have until October 17 to file.

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Daria Uhlig contributed to the reporting for this article. 

About the Author

Brian Nelson is a Denver-based writer who specializes in writing about finance, technology, and other complex topics. As a former Certified Financial Planner, Brian spent years helping people understand their finances and learned that not all successful financial planning is about numbers. Brian has written for numerous financial planning firms, personal finance websites and financial publications including Dow Jones Publications.

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