8 Facts About Late Filing and Late Payment Penalties

Woman filing her taxes late with TaxSlayer

The information in this article is up to date for tax year 2023 (returns filed in 2024).

The deadline to file your federal income tax return and pay any taxes you owe from the previous year is typically April 15. If that date falls on a weekend or holiday, then taxes are due on the next business day. 

If you are unable to submit your return and/or pay your tax bill in time for the due date, it’s important to know what you can expect. Here are eight facts about what happens if you pay or file taxes late. 

1. If you are owed a refund, there is no penalty for filing late

The IRS will simply hold onto your money until you do submit your return. The thing is, you must file your taxes within three years of the original deadline to claim your refund or you will lose your right to it. 

2. If you owe taxes and do not file your return by the deadline, you will face a late filing penalty

For each month that you do not file, you’ll be charged 5% of the taxes you owe. The maximum fee is 25% of your tax liability. 

3. If you have not filed within 60 days of the tax deadline, you will owe a fee

Your fee will either be $205 or 100% of your unpaid taxes, whichever is less. 

4. If you file your return but you don’t pay your tax bill by the deadline, you will owe a late payment penalty

The current penalty is equal to 0.5% of the taxes you owe for each month you fail to pay your taxes past tax day. The maximum fee is 25% of the taxes you owe. 

5. If you don’t file a return or pay your bill, you aren’t penalized twice

Instead, the 0.5% late payment fee will be waived. 

6. If you requested an extension, you will not be charged a penalty

Even if you filed for an extension, you must pay your tax bill by the original IRS filing deadline. An extension means you have until the due date in October to file your return. What is a tax extension?

7. You will start accumulating interest on your unpaid taxes one day after your bill is due

This interest will compound daily until the bill is paid in full. The current interest rate is 5% but is subject to change.  

8. The IRS offers a first-time penalty abatement to forgive qualifying taxpayers from failure to file and failure to pay penalties

You may qualify if you meet the following requirements: 

  • You were not required to file a return before or you did not receive a penalty for the previous three years. 
  • You filed any required returns or filed an extension for all previous years. 
  • You paid or set up a payment plan for any tax due. You must be current on your payment plan if you have one. 
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