What Happens If You Don't File Your Taxes?

What Happens If You Don't File Your Taxes?

Failure-to-File Penalty

• 5% of unpaid taxes per month
• Maximum of 25% of unpaid taxes
• Minimum penalty of $485 (if return is over 60 days late)

Failure-to-Pay Penalty

• 0.5% of unpaid taxes per month
• Maximum of 25%
• Note: You can avoid this by paying at least 90% of what's owed

Interest

• The IRS charges interest on unpaid taxes and penalties
• Currently: Federal short-term rate + 3%

What the IRS Can Do

• File a substitute return (Substitute for Return / SFR) on your behalf — usually unfavorable
• Issue a tax lien on your property
• Levy (seize) your wages, bank accounts, or property
• Revoke your passport for serious tax debt

What If You Can't Pay?

• File anyway to avoid the larger failure-to-file penalty
• Set up an installment agreement
• Offer in Compromise if you qualify
• Currently Not Collectible status in hardship cases

Catching Up

You generally have 3 years to file and claim a refund before it's forfeited.

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Behind on your taxes? K2 Tax Solutions can help you get back in compliance without the stress.