- Days left

What Happens When You Don't File Your Taxes

×
Forgot to pay taxes
Alamy
By Mandi Woodruff

What actually happens to Americans who either forget or flat out refuse to file their taxes?

The simple answer is that it's nothing good. In fact, after doing some digging, we're pretty sure you'd be better off filling out your tax forms in crayon than sitting on your hands and letting the IRS have at you.

"There's simply no hiding from the IRS," says Odysseas Papadimitriou, CEO of Cardhub.com. "Level with yourself as well as the IRS about your ability to pay, pick a payment option that makes the most sense, and make sure to honor the terms of your agreement."

Just in case you were curious, here's what happens if you don't:

You haven't filed your taxes at all. Skip filing all together and you're already looking at paying a 5 percent monthly fee on however much you owe. It maxes out at 25 percent. If you wait more than 60 days to file, then you'll get hit with a $135 fine, or 100 percent of the taxes you owe (whichever is less).

You've gotten a filing extension but haven't paid your taxes. Even if you've gotten an extension to file your taxes by Oct. 15, that doesn't mean you get six extra months to pay. The IRS levies a 0.5 percent fee on your unpaid taxes every month until the balance is paid, PLUS at least 3 percent in interest that is compounded daily. Ouch.

If you have filed an extension to file AND have paid at least 90 percent of your tax bill by April 15, however, this penalty doesn't apply. But it doubles if the IRS issues a letter demanding immediate payment.


You haven't filed your taxes OR paid your tax bill. In this case, you have two strikes against you. The IRS will calculate penalties for both and then subtract the late payment fee from your late filing fee. The $135 late charge for filing after 60 days still applies.

You've filed your taxes by April 15 but still haven't paid. First of all, hats off to you for at least filing. The IRS looks kindly on taxpayers who file, even if they can't pay straightaway. On-time filers get a discounted penalty rate of 0.25 percent per month so long as they have a payment agreement in place.

You've filed your taxes and you want to pay your bill in increments. The IRS does have monthly payment plans for taxpayers who can't fork over funds for their entire bill straightaway. But there are some caveats to consider: An application fee that ranges from $52 to $105, and the late payment and interest charges of 0.05 percent and 3 percent, respectively. You can set up a payment plan online here.

Another option would be to consider paying your bill on a 0 percent interest credit card -- but only if you plan on paying your bill before the promotional period ends. One-time credit/debt card fees apply.

Your only way out: If you want a free pass on paying or filing your taxes on time, you're going to have to come up with a better excuse than a sick day. Per the IRS, you'll need proof of a "reasonable cause" rather than forgetfulness. And don't kid yourself into thinking you're off the hook if a month goes by and no IRS lackeys come calling. It can take anywhere from six months to a year for the agency to catch up to late payers.

And if you've decided to ignore Uncle Sam because you think you won't be able to afford your payment, you're better off at least knowing what you're up against. There are plenty of tax estimate tools available which will give you an idea of what you'll owe or be owed.

See IRS.gov for more details on late fees.

More from Business Insider

Increase your money and finance knowledge from home

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

TurboTax Articles

Ways To Increase Your Tax Refund You Never Thought About

Laying the groundwork for a tax refund requires some simple tax planning, a little research and some forethought. Reviewing your tax status, consulting your spouse when filling out your W-4s and taking advantage of several tax credits can help you increase your tax refund. TurboTax also can help decide which credits can get you the biggest refund.

What Extra Tax Deductions Should I Make Sure To Take?

The federal government offers tax deductions and credits to reduce taxable income under certain circumstances. There are several that are often overlooked, including deductions for job hunting, caregiver expenses for dependents and children while you work, a credit to reduce taxes for moderate- to low-income earners and the premium tax credit associated with the Affordable Care Act. TurboTax can help determine if you qualify for these credits and deductions.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

9 Things You Didn't Know Were Tax Deductions

Few realizations are more painful than realizing that you forgot to include a tax deduction that would have lowered your tax bill or increased your tax refund on your tax return. Here are some tax deductions that you shouldn't overlook.

Add a Comment

*0 / 3000 Character Maximum

138 Comments

Filter by:
Wayne

Answer: Free tickets to Hopey Changey Town Resort.

September 24 2014 at 11:51 PM Report abuse rate up rate down Reply
carloscastillo666

Screw you author, if I didn't make profits I don't have to file.. wages are not profits so I don't need to file ****

August 12 2014 at 9:23 PM Report abuse rate up rate down Reply
bambamsgolfcart

Let's ask billionare John Kerry what happens when you avoid paying your taxes!!!!!

April 19 2013 at 4:32 PM Report abuse +2 rate up rate down Reply
1 reply to bambamsgolfcart's comment
bambamsgolfcart

*billionaire

April 19 2013 at 4:32 PM Report abuse +2 rate up rate down Reply
bambamsgolfcart

What happens when you don't file your taxes? That qualifies you for a job in the Obama administration.

April 19 2013 at 4:29 PM Report abuse +4 rate up rate down Reply
mclkarim

You should always file a tax return whether or not you have a tax liability.

April 19 2013 at 12:16 PM Report abuse rate up rate down Reply
JOSEPH G MATTERA

NOTHING HAPPENS IF YOUR NAME IS DINKINS!!!

April 19 2013 at 6:16 AM Report abuse +1 rate up rate down Reply
ljconner

How about a thank-you note from the IRS for those of us who paid a ton of money in taxes and had to pay more.....and did it before the deadline !!!!!!!!!!

April 19 2013 at 12:07 AM Report abuse +1 rate up rate down Reply
Jeanne

You can get away without paying taxes if you're the head of the IRS. right Tim?

April 18 2013 at 5:35 PM Report abuse +1 rate up rate down Reply
mikcl4

who wrote this story ? some one working for the irs, this story designed to instill fear in people, well screw these communists, that all the irs is, an illegal extortion ring

April 18 2013 at 7:37 AM Report abuse rate up rate down Reply
catslegl

What about those dozens of IRS employees who took from us citizens by stealing government benefits? Can we charge them interest and penalties on what they stole, which lets face it, WE paid for....?

April 18 2013 at 6:07 AM Report abuse rate up rate down Reply