What If I Didn’t Pay Taxes Last Year?

Woman filing her taxes with TaxSlayer on a computer

Filing taxes is your responsibility when you earn income. If you didn’t file a return last year, there was probably a reason. However, you’ll want to get back on track. Here’s what you can expect when you do file this year. 

What if I didn’t file or pay my taxes last year? 

What you need to do is file back taxes. First, gather your documents. If you are missing any documents, you can request them from the IRS using Form 4506-T.  

Next, download any prior year IRS tax forms. If you need to file for 2017, download a Form 1040 for 2017. Same with 2016, 2015, etc. To file for 2014 or earlier, you will need to mail in your return. It cannot be prepared online. However, if you need to file taxes for 2015, 2016, or 2017, use TaxSlayer to prepare and file your forms.  

Finally, you will complete and submit your return as usual and include any payment you owe.  

Since you did not file your taxes at all last year, you will most likely have to pay a penalty. In this case, you will receive a notice of penalty and interest fees you will need to pay in addition to your taxes due.  

If you are getting a refund and it has been 3 years or less since your original deadline, the IRS will mail it to you. 

What if I filed my taxes but didn’t pay my tax bill? 

If you filed a tax return but you didn’t pay your bill, you will be charged a fee for late payment – usually 0.25% of your tax bill per month that it was late. If you filed before the tax filing deadline, the fee will be lower than if you filed late. But beware of compounding interest on your unpaid tax bills.  

To avoid this, you can enroll in an installment plan through the IRS to pay off your tax bill bit by bit. If you owe less than $50,000, this is a great option to tackle your tax bill. 

Read also: What If I Can’t Pay My Taxes? Top 7 Scary Tax Questions 

Does the IRS know how much income I earned? 

Yes. Every form you received from your employer has also been sent to the IRS. If you are self-reporting, they will still know how much you earned. They can use any of the following methods if they are suspicious that you did not report all your income.  

What if I miss the April 15th deadline? 

File as soon as possible, even if you miss the original deadline.  

If you owe on your tax bill, you will immediately start to accumulate a failure-to-file penalty. This begins at 5% of your tax bill and caps off at 25%. However, if it takes you more than 60 days after April 15th to file, you will be charged an additional fee of $135 or 100% of the taxes you owe, whichever is less.  

On the other hand, if you are expecting a refund you won’t be charged any fees. But you must file within 3 years of the original due date to claim your refund. The IRS won’t send you your refund until you file. 

What if I am approved for an extension? 

If you know you can’t file on time, apply for an extension. That will push back your tax filing deadline to October 15th of that year.  

However, you must still pay your tax bill. An extension is only for filing your return, not paying your bill. You must pay at least 90% of your balance by April 15th. The late fees are less but still start at 0.5% of your tax bill. And you’ll still face the same compounding interest.   

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