What Happens if You Missed the Tax Deadline?

If you owe Uncle Sam money, filing your tax return late (or never) can cost you big bucks.

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If you didn't file your 2021 federal tax return or request an extension by April 18 (or by April 19 for residents of Maine (opens in new tab) or Massachusetts (opens in new tab)), don't let that stop you from completing your 1040 and paying your tax as soon as possible if you owe the IRS money. If you can't file your return, at least pay what you can now. Acting quickly will help keep the penalties and interest you may owe from getting out of hand.

Some people may have more time to file their tax returns and pay any taxes due. For example, filing and payment deadlines are later for some disaster victims, Americans living overseas, and military personnel (see How to Get More Time to File Your Tax Return for details). But if the special rules for these taxpayers don't apply to you, then it's time to stop procrastinating.

You can still file your tax return for free after the April 18 deadline. If your 2021 federal adjusted gross income is $73,000 or less, you can use the IRS's Free File program (opens in new tab) up until October 17. If your income is too high for the Free File program and you're comfortable doing your own taxes, you can also use the IRS's Free File Fillable Forms (opens in new tab) until October 17. These are electronic versions of paper tax forms, and some of the math is done automatically.

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Penalties and Interest for Missing the Tax Filing Deadline

Interest accrues on your unpaid balance and compounds daily from April 18 until you pay the balance in full. The interest rate on underpayments of tax is set each quarter. It's 4% for the second quarter of 2022.

In addition to interest charged on any tax due, you could face separate penalties for both filing and paying late. The late-filing penalty is 5% of the tax due for each month (or part of a month) your return is late (tax filing extensions are factored in). If your return is more than 60 days late, the minimum penalty is $435 (for tax returns required to be filed in 2022) or the balance of the tax due on your return, whichever is smaller. The maximum penalty is 25%.

The late-payment penalty is 0.5% of the unpaid balance for each month (or part of a month) the tax isn't paid. The rate jumps to 1% ten days after the IRS issues a final notice of intent to levy or seize property. However, the penalty is only 0.25% for each month, or part of a month, in which an IRS installment agreement is in effect. Overall, the penalty can be as high as 25% of the unpaid tax. As you can see, the longer you wait, the higher the penalties grow.

When you finally pay any tax due, the IRS will first apply the payment to the tax you owe, then to any penalty, and then to any interest. A penalty amount that appears on your bill is generally the total amount of the penalty up to the date of the notice, not the penalty amount charged each month.

If you have a good explanation for missing the filing or payment deadline, you might be able to avoid the penalties (but not interest). What's a good reason? Think fire, natural disaster, serious illness and the like. A lack of funds, in and of itself, is not a sufficient reason for failing to file or pay on time, although the underlying reason for your lack of funds might satisfy the IRS. If you want to request a penalty waiver, attach a statement to your return fully explaining your reason for filing or paying late.

If you're confident you're due a refund, then there's no reason to worry. The IRS doesn't penalize taxpayers for filing a late return if they're getting a refund.

Penalty Relief After Missing the Tax Deadline

Some people who are fined for missing the tax filing and payment deadline may qualify for penalty relief. If you're hit with a penalty, contact the IRS by calling the number on your notice and explain why you couldn't file and/or pay on time. They may cut you a break if you have a good reason like your house caught on fire, you were seriously ill, and the like.

If you have a history of filing and paying on time, you may qualify for relief under the IRS's "first-time penalty abatement" policy (opens in new tab). Typically, to have your penalty waived under this policy, you must have filed and paid your taxes on time for the past three years. There are other requirements that you must satisfy, too.

What If You Can't Pay Your Taxes?

If you didn't file your tax return because you can't pay your taxes, the IRS has a couple of options for you. For instance, you can go online (opens in new tab) and request a payment plan that allows you to pay the tax you owe over time. Short-term online plans offer payment periods of up to 180 days if the combined tax, penalties and interest you owe is less than $100,000. Longer-term online payment plans, which require monthly payments, are available if the total amount owed is less than $50,000 (a set-up fee may apply for long-term online payment plans, depending on your income).

If you don't qualify for an online payment plan, you can ask the IRS for an installment agreement by filing Form 9465 (opens in new tab). Depending on your income, a set-up fee may apply if the IRS approves your agreement. The IRS typically responds to installment agreement requests within 30 days.

Another option is to request an offer in compromise (opens in new tab) (OIC). Generally, with an OIC, you agree to pay a reduced amount of tax. However, before the IRS will consider an OIC, you must file all tax returns due and make any estimated tax payments required for the current year. The IRS generally approves an OIC if it thinks the amount you offer is the most it can reasonable expect to collect.

You might also be able to get the IRS to temporarily suspend collection (opens in new tab) of your tax debt if you're facing a financial hardship (i.e., paying your taxes now would prevent you from covering your basic living expenses). This does not mean that your tax debt goes away, though. And penalties and interest continue to accrue until your debt is paid in full.

State Tax Return Deadlines

Don't forget about your state tax return (unless you live in a state with no income tax) The due date for most state tax returns was April 18. However, eight states – Delaware (opens in new tab) (May 2), Hawaii (opens in new tab) (April 20), Iowa (opens in new tab) (May 2), Louisiana (opens in new tab) (May 16), Maine (opens in new tab) (April 19), Maryland (opens in new tab) (July 15), Massachusetts (opens in new tab) (April 19), and Virginia (opens in new tab) (May 2) – give you more time to file. Check with the state tax agency (opens in new tab) where you live to learn more about state tax deadlines…and about penalties for missing them.

Rocky Mengle
Senior Tax Editor, Kiplinger.com

Rocky is a Senior Tax Editor for Kiplinger with more than 20 years of experience covering federal and state tax developments. Before coming to Kiplinger, he worked for Wolters Kluwer Tax & Accounting and Kleinrock Publishing, where he provided breaking news and guidance for CPAs, tax attorneys, and other tax professionals. He has also been quoted as an expert by USA Today, Forbes, U.S. News & World Report, Reuters, Accounting Today, and other media outlets. Rocky has a law degree from the University of Connecticut and a B.A. in History from Salisbury University.