What Happens If You Don’t File Your Taxes?
Failing to file your taxes can lead to serious consequences. Here’s what you need to know.
1. You May Owe Late Fees and Penalties
• The IRS imposes a failure-to-file penalty (5% of unpaid taxes per month, up to 25%).
• If you owe taxes, you also face a failure-to-pay penalty (0.5% per month).
2. Interest Will Accumulate on Unpaid Taxes
• Interest on unpaid taxes compounds daily, increasing what you owe.
3. You Could Lose Your Tax Refund
• If you are owed a refund but don’t file, the IRS will hold your refund until you do.
• You have three years to claim a refund before it’s forfeited.
4. The IRS May Take Legal Action
• The IRS can issue liens, levies, or wage garnishments to collect unpaid taxes.
• In extreme cases, tax evasion can result in criminal charges.
What Should You Do?
• If you missed a deadline, file as soon as possible to minimize penalties.
• If you can’t pay in full, set up a payment plan with the IRS.
• Consult a tax professional if you need help resolving tax debt.