Missed The Tax Deadline? Here’s What To Do Now

No one wants to be in trouble with the tax man. If you missed this year’s filing deadline, don’t panic. But also…? Act fast.

The deadline for most taxpayers to submit their 2024 tax return was April 15 — except for those who get some extra time to file because their states were hit by a natural disaster. And taxpayers who filed an extension will have until Oct. 15 to submit their return, though they still were supposed to pay their tax bill by April 15.

If you didn’t file and you’re owed a refund, here’s a little-known fact: The IRS doesn’t do anything if you’re expecting a tax refund and miss the filing deadline.

“There are never any late filing or late payment penalties if a taxpayer is expecting a refund,” says Jan Lewis, CPA, a tax partner with BMSS Advisors and CPAs in Ridgeland, Miss.

Still, even if you don’t owe money, there’s still a good reason to file your taxes: If you don’t file within the three-year statute of limitations, you forfeit the right to that refund. “While your refund will never be reduced for any late filing penalties, if you have a refund coming, it is always best to file as soon as possible,” Lewis says.

On the other hand, if you have an outstanding tax liability, be sure to follow our step-by-step guide below.

Here’s what to do if you missed the tax deadline, whether you’re in line for a refund or owe the IRS money.

1. File as soon as possible

As noted above, taxpayers who are expecting a tax refund have up to three years after the original filing due date to submit their return and claim that money. For your 2024 tax return, for example, you’ll be able to file up until April 15, 2028.

But if you wait that long, the IRS will simply hold onto the money that’s technically yours. And if you forget to file, you’ll lose your refund.

If, however, you owe taxes, you’ll want to file as soon as possible — both for the peace of mind of settling up and also to help reduce the extra charges that will add up the longer you wait.

By filing your tax return now, even if you can’t pay your bill just yet, you’ll avoid a steep IRS penalty.

“The best solution is to file the return as soon as possible, even if nothing is paid at the time of filing,” Lewis says. “The taxpayer will get a notice from the IRS after the IRS processes the return, they will calculate the appropriate interest and penalty, and hopefully at that point the taxpayer can pay the balance in full or at least request an installment agreement.”

Getting a notice can be scary, but failing to file, Lewis says, “just puts off the inevitable.”

2. Know how the penalties work

If you fail to file your return and fail to pay on time, be aware of the two main penalties you’ll be hit with: the failure-to-file penalty and the failure-to-pay penalty. Both can add up, significantly snowballing your tax liability.

But the failure to file penalty is much steeper than the failure to pay penalty, so even if you owe a tax bill that you can’t pay, be sure to file your tax return as soon as possible to stop at least one penalty from accruing.

Here’s how the penalties work:

• Failure to file: This penalty is 5 percent of your unpaid tax bill, increasing by 5 percent each month, up to 25 percent. In other words, the penalty maxes out once your tax return is five months late. If your tax return is more than 60 days late, the minimum penalty is $510 (or 100 percent of the tax bill, whichever is lower).
• Failure to pay: This charge is 0.5 percent of your tax balance for each month the tax remains unpaid. The penalty won’t exceed 25 percent of your unpaid taxes. (Keep in mind that if you don’t pay your tax within 10 days of getting a notice from the IRS of intent to levy property, the penalty jumps to 1 percent per month.)

In the instances when both penalties are applied, the IRS reduces the failure-to-file penalty percentage by the failure-to-pay penalty for that month. For example, in your first month of an outstanding tax balance, the IRS would apply a 4.5 percent failure-to-file penalty and a 0.5 percent failure-to-pay penalty.

The IRS also charges interest on any outstanding balance, including both the unpaid taxes and any penalties. The agency sets that interest rate quarterly; currently that rate is 7 percent.

If you filed an extension, that gives you more time to file, but not more time to pay. “If the taxpayer did file for an extension, the late filing penalty won’t apply if the return is filed by October 15,” Lewis says. However, the late payment penalties start piling up immediately after the due date whether an extension is filed or not.

In some instances, taxpayers can qualify for penalty relief, particularly if they didn’t have a tax penalty within the last three years of filing. In this case, they may qualify for the first time penalty (FTP) abatement. But if they don’t meet the FTP criteria, they may be able to have penalties removed, if they can show reasonable cause.

Lewis recommends that taxpayers use the “reasonable cause” exception when late payments or filings are due to circumstances beyond their control, such as sickness, natural disasters or some other valid reason. For more information on how penalties might be abated, visit the IRS penalties page.

3. Set up a payment plan

Many Americans may avoid filing taxes because they know they can’t afford to pay their bill.

But if affordability is the concern, experts say you should still file immediately. You’ll be able to set up an installment plan with the IRS that also helps you limit the penalties you’re hit with.

For example, if you set up a payment plan, the failure-to-pay penalty is reduced to 0.25 percent each month during your payment plan, the IRS says. See this IRS page for more information.

The payment plan you’re eligible for depends on your individual situation and tax liability.

Bottom line

Filing your taxes is a complicated process, but it’s a part of living and working in the U.S. Taxpayers do have options if they miss the deadline, but the longer they wait to figure out their game plan, the more expensive those penalties and interest will become.