Filing Taxes Late: Penalties, Interest, and Requesting an Extension

Rachel Curry - Author
By

Apr. 12 2022, Updated 3:35 p.m. ET

When it comes to filing taxes, most want to avoid having any issues with their returns or an issue with the IRS. Sometimes people file their taxes late, but doing so has serious financial implications that you'll want to be aware of.

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After all, the last thing you need is a surprise from the IRS, so it's best to be aware. There is hope for late filers. Requesting an extension to file is still an option.

The implications of filing your taxes late

The IRS charges an interest rate of 3 percent plus the current federal interest rate for any outstanding payments. This doesn't include the penalties you'll receive. There's a separate late-filing and late-paying penalty.

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The late-filing penalty amounts to 5 percent of your outstanding balance each month you stall your return. Completing your return now could mean limiting your late-filing penalties to 5 percent (any delay over 60 days requires a minimum $435 penalty), but waiting means you'll incur even more fees up to 25 percent.

As for late-paying penalties, you will be charged 0.5 percent of the unpaid balance monthly. Once you receive a final notice from the IRS before they issue levies or seize property, that rate jumps to 1 percent.

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Aside from interest rates and penalties, other implications include the delay or potential loss of your tax refund, as well as the loss of your social security or disability benefit credits for the period when you didn't file taxes. 

Is there any way to avoid penalties from filing your taxes late?

The IRS doesn't charge monetary penalties to those who don't owe taxes and are getting a refund. Of course, you need to be certain you're getting a refund in order to be sure you won't be penalized.

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Otherwise, it's very rare that the IRS waves penalties for late filers. Viable excuses usually ring to the tune of natural disasters. 

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Even in a circumstance where you aren't charged penalties, you'll still have to pay interest. 

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If you aren't able to file taxes on time, you can request an extension.

The IRS says that you should file your late tax return as soon as possible, despite the fact that you're past the due date. This is because fees and penalties accrue over time, so the longer you wait, the longer you'll have to build up tax debt with the IRS, which isn't an ideal situation for anyone. Also, you won't be able to claim your tax refund without filing your taxes.

If you need an extension, you can file for one with the IRS. According to the IRS, "an extension gives taxpayers until October 17, 2022, to file their 2021 tax return, but taxes owed are still due April 18." To request an extension, a person will need to file Form 4868 using a tax professional or Free File via the IRS website.

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Additional directions request the filer to "Submit an electronic payment with Direct Pay, Electronic Federal Tax Payment System or by debit, credit card or a digital wallet and select Form 4868 or extension as the payment type." Note that taxpayers are still required to pay their tax bill (or face penalties) by the original deadline even if they request an extension to file.

What's the deadline for filing your state return?

While federal returns may be due on April 18, state return deadlines are a little different. According to CNET, most states align with the April 18 deadline but some states don't:

  • Delaware: May 2
  • Hawaii: April 20
  • Iowa: May 2
  • Lousiana: May 16
  • Maine: April 19
  • Maryland: July 15
  • Massachusetts: April 19
  • Nebraska: April 15
  • Oklahoma: April 20 (for E-file)
  • Virginia: May 1
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