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What Happens if You Don't File Taxes?

Patrick Austin, J.D. | September 27, 2024

Patrick Austin
Attorney from George Mason
Patrick Austin, JD

Patrick Austin is a licensed attorney with a background in data privacy and information security law. Patrick received his law degree at George Mason University's Antonin Scalia Law School, where he served as the Editor-in-Chief for the National Security Law Journal.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: If you fail to complete a tax filing, then you are putting yourself at risk of drawing the ire of the Internal Revenue Service. If you owe taxes, failing to file your tax return can result in the imposition of harsh penalties and interest.

If there’s one thing you can count on in life, it’s tax day. By way of background, tax day is the official deadline to file tax returns and to pay taxes before late filing penalties may be imposed by the Internal Revenue Service (IRS). Tax law requires people and businesses to file a federal income tax return. In addition, state laws generally require a state income tax return to be filed each year.

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The IRS charges penalties for not filing a return

If you don’t submit an IRS filing within the tax filing deadline, there is a risk it will wind up costing you. IRS penalties are likely to be charged and in rare cases, criminal sanctions may be imposed. Though, it is important to note that not everyone is legally obligated to file a tax return each year. The requirement to file a return will depend largely on your income for the year (more on this topic below).

Do you actually need to file a tax return?

If you are unsure whether you actually need to file a federal tax return, consider using this free tool from the IRS to figure out whether you need to file a return. For context, there is a minimum amount of income you need to earn before the filing requirement is triggered. The minimum income threshold will depend on your filing status, age, and a myriad of factors. For example, if you are filing taxes as a single individual and you are under the age of 65, the income threshold to require a tax return filing is $13,850. If you are age 65 or older, the minimum income threshold to require a tax return is $15,700. If you are filing jointly with your spouse and you are both under the age of 65, the income threshold to file a tax return is $29,200. If you are filing jointly with your spouse and you are both over the age of 65, the income threshold to file a tax return is $30,700.

Beware of the potential penalties if you don’t file a tax return

If you owe taxes and fail to file your tax return by the filing deadline, you may incur significant penalties and interest. A late filing penalty will likely be charged for not filing your tax returns on time.

If your tax return is filed more than 60 days late, the minimum penalty imposed will be $435 or the tax you owe, whichever is less. In addition, interest will be charged on unpaid taxes and penalties. Interest is even charged on the accrued interest. The IRS interest rate is the federal short-term rate plus 3 percent. The rate is set every three months, and interest is compounded daily.

You may have to serve jail time for not filing tax returns

The federal government has the authority to file criminal charges against individuals who willfully fail to file tax returns in order to actively avoid paying taxes. This is known as tax evasion. If you are found guilty of tax evasion, jail time and criminal fines may be imposed.

What happens if you don't file your taxes but don't owe anything?

If you opt not to file a federal tax return, but don’t meet the income requirements for filing, then you will likely avoid getting hit with a penalty or fine. According to the IRS, “there's no penalty for filing after the April 15 deadline if a refund is due.” However, it is important to note that if you don’t file a tax return, it means you risk missing out on potentially receiving a tax refund due to various refundable tax credits, such as the Earned Income Tax Credit and Child Tax Credit.

So the answer to the question, “what happens if you file your taxes late but don't owe anything?” is - not much, except possible FOMO on getting tax refunds or a tax credit.

What happens if you don't file taxes on time?

If you owe taxes and do not file your tax documents on time, then you could potentially get hit with multiple penalties by the IRS. For example, the IRS could impose a “failure to file” penalty and/or a “failure to pay” penalty. Let’s take a look at each:

  • Failure to file penalty: The penalty for unfiled tax returns is calculated at 5 percent of the balance due per month (or part of a month), with a cap of 25 percent of your unpaid tax as of the due date.
  • Failure to pay penalty: The penalty for failing to pay your tax liability is calculated at 0.5 percent of the unpaid taxes for each month (or part of a month) that the tax balance goes unpaid, but capped at 25 percent of your unpaid taxes.

The late filing penalty applies to outstanding tax payments that remain unpaid after the due date. If, after five months have passed and your tax bill remains unpaid, the failure to file penalty will be capped out while the failure to pay penalty continues until the tax is paid, up to 25 percent of the unpaid tax. In the event the failure to file and failure to pay penalties run concurrently, the maximum penalty that can be assessed is roughly 47.5 percent.

Key takeawys

If you are wondering, “what happens if you don't file your taxes?” Here is the answer - nothing good. Here are some key takeaways if you fail to file taxes:

  • Late Filing Penalties: 5% of the unpaid taxes per month, up to 25% of the total owed.
  • Interest Accrues: Interest on unpaid taxes and penalties compounds daily.
  • Minimum Penalty: If filing over 60 days late, minimum penalty is $435 or the tax owed, whichever is less.
  • Failure to Pay Penalty: 0.5% per month on unpaid taxes, capped at 25%.
  • Jail Time: Willfully not filing could lead to criminal charges and jail.
  • Missed Refunds: If no taxes are owed, you risk missing out on refunds or credits.
  • Maximum Combined Penalty: Failure to file and pay penalties can reach 47.5% of your unpaid tax.

Even if you don’t owe any taxes, it is important to file your tax returns each year in a timely manner. Failing to file your taxes could result in the IRS imposing a “failure to file” penalty. In addition, failing to file and pay your taxes could lead the IRS to impose a “failure to pay” penalty.

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