• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

What can happen? If the IRS owes you a refund, it can be lost forever. And if you're supposed to pay the tax agency but don't, you can face stiff penalties.

In general, it’s best to file your taxes. Here's why.

What if you don't file taxes?

If you don’t file by Tax Day, the IRS will start charging a failure-to-file penalty the next day
Derek Hatfield / Shutterstock
If you don’t file by Tax Day, the IRS will start charging a failure-to-file penalty

If don't owe any money or if you have a refund coming, you're not required to file a tax return — but it's still a good idea.

If you miss the deadline, there are no penalties — but don't wait too long if you're owed a refund, because you've got just three years to claim it. After that, the IRS keeps the cash.

If you owe the IRS and don't submit your tax return by Tax Day — which usually falls on April 15 — you'll be charged a failure-to-file penalty starting the very next day, and it can add up to a lot of money.

The IRS will charge you 5% of your unpaid tax bill for every month — or partial month — until your return is filed. The penalty will keep growing until it hits a maximum 25% of what you owe.

If you file your return more than 60 days after it’s due, your minimum penalty jumps to either $330 or 100% of your tax bill — whichever amount is lower.

When life gets complicated and you know you won't be able to file your taxes by April 15, you can request an extension. Tax software and tax pros — both available through H&R Block, for example — make filing for an extension easy.

Just don’t forget your new due date, because missing it will incur the same penalties as missing the original date. And keep in mind that your new due date is only for filing — your tax bill is still due to be paid by deadline day.

Kiss Your Credit Card Debt Goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Explore better rates

What if you don't pay your taxes?

If you don’t pay your tax bill by the deadline, the IRS can charge a failure-to-pay penalty
Eviart / Shutterstock
If you don’t pay your tax bill, the IRS can charge a failure-to-pay penalty

If you file your taxes on time but don’t pay your tax bill by the deadline — or pay only part of it — the IRS will charge a failure-to-pay penalty.

The tax agency will ding you for 0.5% of your unpaid tax bill every month, up to a maximum of 25% of the amount due.

At the same time, interest will be charged on your unpaid taxes. The interest rate is the federal short-term rate plus 3%.

What if I can’t afford to pay my taxes?

If you can't pay your bill right away, call the IRS to arrange a payment plan
sirtravelalot / Shutterstock
If you can't pay your bill right away, call the IRS to arrange a payment plan

If you don't have the money to pay your tax bill immediately, you have some options.

First, you could leave only a small unpaid balance and pay as much of your taxes as possible. That way, you'd be charged far less in penalties and interest.

An alternative is to request a payment plan and cover your tax bill to the IRS in installments.

Both options beat not filing.

If you owe $5,000 on April 15 and wait six months to file and pay, your penalty will be $1,275. That's 25% of $5,000 — 5% for each month ($250) until the maximum 25% was reached after five months — for a total of $1,250. The additional $25 is the 0.5% monthly failure-to-pay penalty, which kicks in once the other charge maxes out.

But if you owe $5,000, file on time, pay $4,000 and take six months to pay the other $1,000, you'll be charged just $30 — the the 0.5% monthly failure-to-pay penalty, times six months — plus interest.

And if you owe $5,000, file on time and arrange to make installment payments, you'll be charged the 0.5% failure-to-pay on the unpaid balance each month, plus interest. There also are setup fees for payment plans that go beyond 120 days.

This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Get Started

Don’t ignore your taxes

Filing taxes on your own isn’t easy — but with professional help, it can be
Drazen Zigic / Shutterstock
Filing taxes on your own isn’t easy — but with professional help, it can be

No matter what happens, it's best to file your taxes on time and pay your bill as soon as possible. Request an extension or a payment plan if you need some leeway.

Ignoring Tax Day is guaranteed to cost you hundreds or thousands of dollars extra — and the IRS can take more serious actions if you continue to ignore your tax obligations.

The tax agency could file a notice of a federal tax lien (a claim on your property) and could potentially seize your home or garnish your wages. The agency also can file charges of tax evasion, which is a felony.

Filing taxes on your own isn’t always easy — but with expert assistance, it can be.

H&R Block’s tax software and tax professionals can find the best solution to minimize your costs and maximize your refund.

Sponsored

Maximize your wealth with Zoe Financial

Zoe Financial's elite network of fiduciary advisors offers personalized strategies to enhance your financial success. Experience exclusive investment opportunities and bespoke wealth management services. Trust Zoe Financial for unparalleled expertise and a commitment to your prosperity.

Esther Trattner Freelance Contributor

Esther was formerly a freelance contributor to Moneywise.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.