How to File Late Taxes: A Step-by-Step Guide for Individuals and Businesses

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It’s always best for businesses and individuals to file their tax returns on time — but with the IRS, late is always better than never.

Here’s a look at the process for filing taxes late, what happens if you file taxes late and the penalty for filing taxes late. You’ll also learn what happens if you file your taxes late but don’t owe anything, and your payment options if you do owe a bill. 

Who Needs To File Late Taxes?

In 2024, Tax Day fell on the customary date of April 15 for most Americans. Residents of Massachusetts and Maine had until April 17 because of the Emancipation Day and Patriot’s Day holidays.

Those who missed those deadlines might be worried — and for good reason — about the ramifications, financial and otherwise. The good news is that it’s not too late for them to confront the situation, file their returns and settle up with the IRS.

Here are the key takeaways about who has to file and who might be exempt.

• Nearly all income-earning adults must file tax returns, even if they’re late.
• If you do not owe any federal taxes, you might not have to file a tax return, but the IRS advises that it might be in your best interest to, anyway.
• You might be exempt from filing a return if your income is under the filing requirement, which varies according to your filing status, age and classification, such as surviving spouse or dependent. 

What If You Own a Business or Are Self-Employed? 

Small business owners and the self-employed also must file tax returns, even if they’re late — and they have unique circumstances to consider, including: 

• Protecting their Social Security benefits, which they might lose for any year that they fail to file. 
• Avoiding issues securing business loans.
• Forfeiting refunds from estimated quarterly tax overpayments.
• Preventing the IRS from filing a substitute return on their behalf that might not accurately reflect their credits and deductions.

How Many Years Late Can You File Taxes?

It is never too late to file taxes if you owe the IRS money. Some IRS penalties accrue indefinitely, so it makes sense to pay your taxes as soon as you can or reach out to the IRS and set up a payment plan. You’ll learn more about penalties and payment options further down the page.

You have up to three years to file a return if the federal government owes you a tax refund.

It’s important to note that if you fail to file, the IRS may file a tax return for you. That return may not reflect anytax deductions or exemptions you deserve, which could leave you with a large tax bill. If this happens, the IRS will send you a Notice of Deficiency. You will have 90 days to file a return with the accurate deductions, exemptions and income.

How To File for an Extension

You can avoid filing late by submitting Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. You can send your request online, by mail through an IRS e-filing partner or with the help of a tax professional. 

Steps To Prepare for Filing Late Taxes

If the IRS owes you a tax refund, you must file your past-due tax returns within three years to claim that money. This includes tax credits, such as the Earned Income Credit or the Child Tax Credit, as well as refunds from estimated quarterly taxes or withholding taxes taken from your paycheck.

To claim your money or to avoid further fees, you should file your taxes as soon as you can. Here’s how to get started.

Gathering Required Documents

Whether you file late or on time, the first step is to set yourself up for success by gathering your necessary documents, forms and identifying information including: 

• Social Security or tax ID number
• Bank account and routing numbers for payments or refunds
• Last year’s pin number and AGI for verification
• Paycheck stubs
• Bank, payment app and marketplace statements
• Records of digital asset transactions
• Records of unemployment compensation
• Income documents like Form W-2 and any applicable 1099s
• Any paperwork documenting charitable donations, childcare or dependent care expenses, mortgage and property tax payments, health care expenses and retirement contributions
• Business owners and the self-employed need most of these same documents, but might also need to produce mileage logs, home office deductions and square footage, asset purchase details and payroll records

Filing Options for Late Taxes

Whether you’re filing late or on time, it’s better to file electronically than to file on paper by mail in nearly all situations. The IRS recommends e-filing because it’s much faster. The agency receives and confirms your return almost instantly and can process electronic returns in a few days instead of a few weeks.

This is especially important when you’re filing late because interest charges, penalties and fees can accrue while you wait. Also, e-filers receive refunds much faster than those who file by mail. 

Choosing the Right Tax Software

If you e-file, you’ll have your choice between software providers like TurboTax, TaxAct, FreeTaxUSA and TaxSlayer.

You might also choose a company like H&R Block, which provides digital filing and also maintains a network of in-person offices nationwide. They have services ranging in cost from free for the most basic returns, to those that cost hundreds of dollars for more advanced features.

Take time to do your research and find the right software at the pricing tier that includes all the features you need and nothing more. 

However, the IRS offers a free, simple alternative that can serve most taxpayers. 

IRS Free File Program

The IRS Free File program makes it easy for Americans to file their taxes online and receive any refunds promptly. Free File will open in January 2025 and remain open for extended or late tax returns through Oct. 15, 2025.

Taxpayers who have an adjusted gross income of less than $79,000 can take advantage of free guided tax preparation, with tax filings completed on an IRS partner site. Higher earners can still use the system’s electronic forms to file their taxes for free online, but those users must be familiar with basic tax preparation to use the self-guided option.

Consider Professional Tax Help

If you haven’t filed back tax returns or you have unpaid tax bills, it’s a good idea to contact a tax professional. They may be able to help you find deductions to minimize your tax liability and can help you file your taxes quickly to avoid additional penalties.

If you have tax debt, a tax lawyer, tax accountant or tax debt relief firm may be able to help you negotiate a payment plan with the IRS. This could help you pay down your tax debt and maintain your current lifestyle. It’s important to make a payment as soon as possible to show the IRS you are willing to pay your debt.

Making Payments on Late Taxes

If you owe back taxes, the IRS will accept a lump sum payment or negotiate an installment plan that lets you pay over time. If you can’t pay all at once, the IRS will accept either a short-term payment plan that you’ll settle in 180 days or less, or a long-term plan beyond six months that you’ll pay off in monthly installments.

Those who owe $50,000 or less in combined taxes, fees and penalties can use the Online Payment Agreement application on IRS.gov. The IRS might grant a payment plan to those who owe more than $50,000, but they’ll need to complete a Collection Information Statement, Form 433-A. 

Understanding the Penalties for Late Filing

Filing taxes late can result in steep fees and fines that can add up quickly, wreaking havoc on your finances, savings goals and quality of life.

Types of Penalties: Failure to File vs. Failure to Pay

Here’s a look at how penalties accumulate and inflate your tax bill.

• The Failure to File Penalty is equal to 5% of the unpaid taxes each month or partial month that a return is late. This penalty can reach up to 25% of your unpaid taxes. This penalty maxes out after five months, but if your return is more than 60 days late, you’ll pay a minimum of $100 to $485, or 100% of the underpayment, depending on when the return was due without an extension.
• The Failure to Pay Penalty equals 0.5% of the unpaid taxes for each month or partial month that your bill goes unpaid. The penalty will not exceed 25% of your unpaid taxes.
• If you have a Failure to File Penalty in addition to a Failure to Pay Penalty, your Failure to Pay Penalty will be reduced by the amount of your Failure to File Penalty.
• When you owe back taxes, the IRS may send you a notice with an intent to levy your property. If this happens, the IRS will apply a 1% Failure to Pay Penalty per month or partial month. Even if you pay your taxes before the end of a month, you will still pay the penalty for that month.
• If the IRS discovers that you owe more taxes than were reflected on your return, you will also pay a Failure to Pay penalty on that amount.

Navigating State and Local Tax Implications

Once they submit their federal taxes, late filers will still have state and local taxes to contend with, and the processes, due dates and requirements vary by state. Make sure your software provider or tax professional has the capacity to help you navigate your state and local returns — along with any payments and penalties — before you purchase their services.

Tax Relief Options for Late Filers

The IRS may grant penalty relief to taxpayers who made an effort to comply with tax laws but were unable due to circumstances beyond their control.

To request relief, follow the instructions on the IRS payment notice you received in the mail or call the toll-free number at the top right corner of your notice, and be prepared to describe which penalties you want to be relieved — including Failure to File and Failure to Pay — and the reasons why you believe the IRS should remove them.

Dawn Allcot contributed to the reporting of this article.

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