If you missed the tax deadline (April 15 for most people) for filing your federal tax return, you could face IRS penalties. But if you didn't file your 2023 federal tax return or request an extension by April 15, don't let that stop you from completing your Form 1040, and paying your tax as soon as possible if you owe the IRS money.
And, if you cannot file your federal income tax return, at least pay what you can now. Acting quickly after you miss the tax deadline will help keep the penalties and interest you may owe from getting out of hand.
Note: Keep in mind that some people may have extra time to file their tax returns and pay any taxes due. For example, filing and payment deadlines are later for people directly impacted by storms and natural disasters in several states.
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Americans living overseas and military personnel also sometimes have later tax filing and payment deadlines. But if the special rules for these taxpayers don't apply to you, then it's time to stop procrastinating.
If you missed the tax deadline: Filing for free
Depending on your income, you may be able to file your tax return for free after the April 15 deadline. If your 2023 federal adjusted gross income is $79,000 or less, you can use the IRS's Free File program up until October 15.
If your income is too high for the Free File program and you are comfortable doing your taxes without guided prompts, you can also use IRS Free File Fillable Forms until October 15. These are electronic versions of paper tax forms, and some of the math is done automatically.
Missing the tax deadline: Penalties and interest
When you miss the tax deadline, a key thing that happens is that interest accrues on your unpaid balance and compounds daily from April 15 until you pay the balance in full. The interest rate on underpayments of tax is set each quarter. It's 8% for the quarter beginning April 1, 2024.
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 $510 (for tax returns required to be filed in 2024) or the balance of the tax due on your return, whichever is smaller. The maximum penalty is 25% of your unpaid taxes.
- 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 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.
Can you avoid penalties for missing the tax deadline?
If you miss the tax deadline and have a good explanation, you might be able to avoid the penalties (but not interest). What's a "good" reason for missing the tax deadline? Think fire, natural disaster, serious illness, and the like.
But note: A lack of funds, in and of itself, is not a sufficient reason for failing to file or pay your federal income taxes 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.
What if you are getting a tax refund? If you are confident that you are due a tax refund, then there is no reason to worry. The IRS doesn't penalize taxpayers for filing a late return if they are receiving a refund.
Some people who are fined because they miss the tax filing and payment deadline may qualify for penalty relief from the IRS. If you are 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, etc.
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. 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 as well.
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 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. 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 (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 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 is April 18. Check with the state tax agency where you live to learn more about the penalties involved if you miss a state tax deadline.
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