What happens if I file my taxes late?

Tax season is upon us and it’s important to file your taxes on time. But what happens if you miss the deadline? An interesting article on Forbes caught my attention that delves into the consequences of filing taxes late.

First and foremost, if you fail to file your taxes by the deadline, you will face penalties. The penalty for filing late is usually 5% of the amount of taxes owed per month, with a maximum of 25% of the total tax bill. Additionally, if you owe taxes and do not pay them by the deadline, you will be charged interest on the outstanding balance.

Another consequence of filing taxes late is the potential loss of a tax refund. After three years, the government can keep any unclaimed refunds. So, if you file late and are due a refund from three years ago, you may miss out on that money.

There are some exceptions to these penalties, such as if you have a reasonable cause for filing late, like a death in the family, natural disaster, or serious illness. However, it is important to communicate these circumstances with the IRS and provide documentation to support your claim.

It’s also worth noting that the IRS can file a substitute return on your behalf if you fail to file altogether. This means you may end up owing more in taxes than if you had filed yourself, as the government may not take into account all of the deductions and credits you are entitled to.

In conclusion, while it may be tempting to procrastinate on filing your taxes, it’s important to do so on time to avoid penalties and potential loss of refunds. If you do experience extenuating circumstances that prevent you from filing on time, be sure to communicate with the IRS and provide documentation to support your case.