Too Late to File My Taxes?

tax tips | May 21, 2019 | By Susannah McQuitty

Taxpayers sit down to file a late return at a café.

Life happens, people, but we’ve got good news: It’s not too late to file your taxes. The April deadline doesn’t cut you off from filing your return; it marks the date when penalty fees start being added to your taxes owed.

Not everyone will have late fees, depending on how much tax you paid during the year, but you won’t know for sure until you file. You definitely want to get on that as soon as possible.

Do I have late fees for not filing my taxes yet?

If you’re expecting a refund, there are no penalties for filing late—but you can’t get that refund until you finish your taxes. You can even file your tax returns from up to 3 years ago to get any refund you may have missed from not filing.

If you owe taxes, on the other hand, you’ll have failure-to-file and failure-to-pay penalty fees automatically added to your bill.

A coffee with cinnamon sits by a laptop for e-filing taxes.

What’s the difference between failure-to-file and failure-to-pay?

The failure-to-file penalty is 5% of your tax bill per month. Let’s say you owe a hypothetical $1,000 in taxes. After one month you’ll owe $1,050, since 5% of $1,000 is $50. After two months, that grows to $1,100, and so on.

The penalty won’t exceed 25% of your unpaid taxes if you pay within 60 days after the deadline. From that point on, however, the minimum penalty is either $135 or 100% of the unpaid tax, whichever is smaller.

By contrast, the failure-to-pay penalty is generally 0.5% per month (yes, that’s half a percent) on your unpaid taxes. It won’t grow to more than 25% of your unpaid taxes, and it doesn’t stack with the 5% failure-to-file penalty.

You may not face a failure-to-pay penalty if you requested an extension of time to file by the due date and paid at least 90% of the tax you owe, though. You will, however, have to pay the remaining balance by the extension due date, and interest will apply on the balance.

What if I can’t pay my taxes or the late fees?

Many taxpayers can opt to set up a payment plan with the IRS using their Online Payment Agreement tool. If you can pay your taxes owed within a couple of months and owe less than $50,000, an Online Payment Agreement is probably your best bet.

An Offer in Compromise, on the other hand, is an agreement between you and the IRS to settle for a smaller amount if it’s actually impossible for you to pay the amount of taxes and fees that you owe.

Filing an Offer in Compromise should be more of a last resort than a first choice, though. The process itself is expensive, and if the IRS doesn’t think your offer is appropriate, you have to start over. If at all possible, it’s better to go with the Online Payment Agreement.

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