These Are the Penalties for Filing Taxes Late

Missing deadlines comes at a price.

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.

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 can be as much as 5 percent of your unpaid taxes each month that you are late, up to 25 percent. The failure-to-pay penalty is 0.50 percent each month your IRS payment is late, up to 25 percent, according to the IRS. But, the failure-to-file penalty can be reduced to 0.25 percent 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 percent 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 percent of your tax bill to avoid a failure-to-pay penalty.

Know: Is Taking Out Loans to Pay Off the IRS a Good Idea?

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 percent.

As an example, consider a taxpayer who fails to file their taxes when due on April 15. Assume the taxpayer files his taxes on June 15 and owes the IRS $2,000:

  1. This taxpayer will be assessed a failure-to-file penalty of 5 percent for each month.
  2. Next, a failure-to-pay penalty will be assessed at 0.50 percent each month, including the partial month of June.
  3. Last, interest will accrue on the unpaid taxes and compounds daily, at a rate of 3 percent above the federal short-term rate, beginning the day after taxes were due.

How to Avoid a Penalty for Filing Taxes Late

The IRS allows taxpayers a two-month or six-month filing extension. 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 2019?

The last day to file taxes is typically April 15, unless this date falls on a weekend or holiday. In 2019, all 2018 tax returns are due on Tuesday, April 15, 2019, except if you live in Maine or Massachusetts. Residents in those states have until April 17, 2019, to file their tax return because April 15 is Patriots’ Day and April 16 is Emancipation Day.

Click through to read more about the average IRS refund amount.

More on Taxes

Cynthia Measom and Taylor Bell 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.