Introduction
Every year, thousands of taxpayers miss the April 15 deadline. Sometimes it’s due to procrastination, sometimes because of financial hardship, and sometimes because life simply gets in the way. But failing to file your tax return on time can have serious consequences. The IRS doesn’t just forget about unpaid taxes—it adds penalties and interest that grow until you take action.
Failure-to-File vs. Failure-to-Pay Penalties
The IRS imposes two separate penalties:
- Failure-to-file penalty: Typically 5% of the unpaid taxes for each month your return is late, up to 25%.
- Failure-to-pay penalty: Usually 0.5% of the unpaid taxes per month, also up to 25%.
If you’re both late filing and late paying, the failure-to-file penalty is reduced by the amount of the failure-to-pay penalty for that month. Still, the costs add up quickly.
Interest on Top of Penalties In addition to penalties, the IRS charges interest on unpaid balances. Interest compounds daily, meaning even a small balance can balloon over time.
What If You Can’t Pay?
Even if you can’t pay your full tax bill, it’s always better to file on time. Filing prevents the larger failure-to-file penalty from kicking in. From there, you can explore options like:
- Installment agreements to pay over time
- Offer in Compromise if you qualify for a settlement
- Currently Not Collectible status if you’re facing financial hardship
Conclusion
The bottom line: don’t ignore the deadline. Filing—even without payment—saves you money in the long run. If you’re already behind, professional help can make the difference between spiraling penalties and a manageable resolution.
Contact our office today to discuss your options and protect your financial future.