What Happens If You File Your Taxes Late?
Filing your taxes is an unpleasant activity for almost everyone, even when you’re getting a refund — just seeing terms like “withholdings” and “qualified dividends” tends to have a mind-numbing effect. Fortunately, there are a lot of affordable online tools to help you file your taxes with minimal headaches. And this year, we had more time to take care of our taxes than usual, with the typical April 15th filing and payment deadline being pushed to July 15th in response to COVID-19.
But now, suddenly, July 15th is just a day away. If you need to file a last-minute tax extension request, you can still do that and give yourself until October 15th to file. If you owe taxes, though, you’ll need to pay an estimate of what you owe by tomorrow. The easiest, most accurate way to calculate that may simply be filing your taxes.
With the tax deadline so close, you might be wondering — what would really happen if you filed your federal tax returns late? Will the IRS come knocking on your door on July 16th?
If you’re expecting a refund, nothing will happen. The IRS guideline on late filing and penalties states clearly: “If taxpayers are due a refund, there is no penalty if they file a late tax return.” The only consequence will be that you won’t get your refund until you file your taxes. According to the IRS, it usually takes 21 days to receive your refund. If you’re claiming the Earned Income Tax Credit, it may take a bit longer than that. You can use the IRS’ online tracking tool to check the status of your refund. If you’re really late in filing, though — like, let’s say, three years late — your unclaimed refund may disappear.
If you owe taxes, filing late can really cost you. “Make no mistake — if you owe taxes, you will still need to pay in full by July 15th or there will be penalties, and you’ll start accruing interest,” says Christina Taylor, head of operations for Credit Karma Tax. Filing late is actually worse than paying late. The penalty for filing past the deadline is 5% of your unpaid taxes for every month you don’t file, capped at 25% of owed taxes. That doesn’t mean you’ll only get a penalty if you’re late a full 30 days, though. The penalty can apply for part of a month. If you file more than 60 days late, you will pay a penalty of whichever amount is smaller: $435 or 100% of your owed taxes.
