With work, family, and personal commitments demanding your time, tax season might go by in a blur. Did you file your 2023 taxes or request an extension by April 15, 2024? If the answer is no, you’re not alone.
Forgetting to file your taxes can be stressful, especially if you have a big tax bill to pay. What happens next? Is there a grace period, or will the IRS come after you immediately? Here’s what to expect if you still need to file your 2023 taxes.
If You Forget to File and You Don't Owe Taxes
If you don’t file 2023 taxes but don’t owe any money, you won’t face any federal penalties. However, there are still good reasons to file as soon as possible.
- You might lose your refund: You technically have three years to file a tax return if the government owes you money. If you miss the deadline, you could lose your funds.
- Saving money: Even if you don’t owe any taxes for the 2023 tax year, you may qualify for certain deductions or credits that can lower your taxable income and save you money.
- Avoiding state penalties: While there are no federal penalties for filing late without owing taxes, some states may have their own penalties and interest charges for late tax filings.
If You Forget to File and You Owe Taxes
The consequences can be severe if you neglect to file your 2023 taxes on time and you owe money. You could be penalized an extra 47.5% on top of what you originally owed, plus interest. The IRS could even go after your assets or garnish your wages. Let’s break down what penalties you’re facing:
Failure-to-file penalty
Failing to file your taxes or filing late exposes you to the IRS’ failure-to-file penalty. You could be forced to pay an additional 5% of your unpaid taxes each month your return is late. The penalty maxes out at 25% of your bill.
Anyone who files their 2023 tax return more than 60 days after April 15, 2024, will have to pay at least $485 or their total tax bill, whichever penalty is smaller.
Failure-to-pay penalty
If you owe taxes and don’t pay by the original deadline, the IRS could charge a failure-to-pay penalty of 0.5% each month your taxes go unpaid, up to 25% of what you owe.
Taxpayers who are subject to both penalties get a bit of help. Whenever the failure-to-file penalty and the failure-to-pay penalty overlap, the IRS lowers the failure-to-file penalty by 0.5%.
For example, if you owe $2,000 in taxes and still haven’t filed:
- Your failure-to-file penalty is 4.5% instead of the usual 5%.
- Your failure-to-pay penalty is 0.5%.
Interest
In addition to penalties, you’ll also be charged interest on the amount you owe until it’s paid in full. The interest rate changes quarterly.
Levies and liens
The IRS can file a Notice of Intent to Levy, letting you know that your assets are potentially up for grabs. They can take your car, property, bank account, and more if you don’t pay your bill or make a deal within 30 days of receiving the notice.
Get Back on Track with Kondler & Associates, CPAs
It might be tempting to pretend your tax problems don’t exist, but that won’t make them go away. If you’re owed money, you’re giving the government an interest-free loan for no reason. You could also lose your funds if you wait too long to file. If you have a tax bill, waiting only increases the amount.
However, what if you’re not ready to pay your entire bill? There may be options. You could apply for an installment plan and pay over time or an offer in compromise and pay a smaller lump sum.
Don’t stress about your options. The experienced team at Konlder & Associates, CPAs, can help you navigate your next steps. We understand tax resolution and will find a solution that makes sense for your situation. Contact us today to learn about how to handle your 2023 tax bill.
