Most years, the deadline to file your federal income tax is on or around April 15. In 2020, the federal government extended that deadline to July 15 because of potential delays and obstacles caused by the COVID-19 pandemic. If you miss this deadline, you can request to file on the October 15 tax filing deadline instead. There can be consequences for filing late, but the type of penalty depends on several circumstances:
- Did you request a tax extension?
- Do you qualify for a refund?
- Do you owe taxes?
Here’s what you need to know about the October 15 tax filing extension deadline and penalty fees for failing to pay or file your federal income taxes on time.
Note: State tax requirements and tax return extensions vary by state. If you need an extension on your state income tax, consult with a tax accountant or review your state’s tax rules.
Did You Request a Tax Extension?
If you are not prepared to file your taxes by Tax Day, you must request an extension by submitting Form 4868 to the IRS. If you requested an extension by the July 15 deadline in 2020, you have until October 15 to file your taxes. As long as you file by October 15, you won’t pay fees associated with late filing.
However, extensions to file your tax return do not include an extension to pay taxes that you owe. Any tax owed should be paid by the original deadline to avoid late payment fees. That’s April 15 in most years and July 15 in 2020. Estimate the amount you expect to owe on your income taxes and send payment when you submit your extension request to avoid penalties and interest.
If you are not able to pay your taxes by the April deadline, you may be able to qualify for a payment plan, installment agreement, or other relief programs through the IRS.
Tax Tip: Submit your tax returns early to prevent fraud. The beginning of the tax season is when most tax identity theft occurs, so it’s best to get your return in as soon as you can.
Do You Qualify for a Refund?
If you are owed a refund, there typically is no penalty for filing late, and you do not need to file an extension for the October 15 date.
However, you’re required to file a return to receive your refund. An original return claiming a refund must be filed within three years of its due date to receive a refund from the IRS. After this point, it’s usually not possible to get a refund or to apply any credits to other tax years.
Tax Tip: Learn how to maximize your tax return for a bigger refund.
Do You Owe Taxes?
If you owe income taxes, answer the following question: Did you fail to file, fail to pay, or both?
If You Paid but Didn’t File
If you do not file your return by the deadline (July 15, or October 15 if you filed an extension), you will owe a failure-to-file penalty. Currently, you will be charged 5% of the taxes you owe for each month (or part of the month) you fail to file past your deadline. The most significant late filing penalty you can face is 25% of the taxes you owe.
If You Filed but Didn’t Pay
If you file your return on time but do not pay the taxes you owe by the April deadline, you will owe a failure-to-pay penalty. The current penalty is 0.5% of the taxes you owe for each month (or part of a month) you fail to pay your taxes past Tax Day (the July 15 deadline in 2020). This penalty may be waived if you can demonstrate reasonable cause for the late payment. If the IRS issues a notice of intent to levy or seize your property, the rate increases to 1% per month. The maximum late payment penalty is 25% of the taxes you owe.
You also start accumulating interest on your unpaid taxes one day after your bill was due. The interest compounds daily until you pay the bill in full. The current interest rate is the federal short-term rate plus 3% but is subject to change.
If You Didn’t File or Pay
If you didn’t pay or file on time, according to the IRS, you will owe a combined penalty fee of 5%—broken down by a 4.5% penalty fee for filing late and a 0.5% late payment fee—for each month or part of a month that you fail to file and pay. After five months, the failure-to-file penalty will max out while the failure-to-pay penalty will continue until you pay your taxes, up to 25%. Overall, your total potential penalty will be 47.5% of the taxes you owe (22.5% in late filing fees and 25% in late payment fees).
Was This Your First Time Filing Late?
The IRS offers a first-time penalty abatement to forgive qualifying taxpayers from failure-to-file and failure-to-pay penalties. You may qualify if you meet the following requirements:
File Your October 15 Taxes Safely
It’s important to protect your identity when filing your taxes online. Without using a secure network, it’s possible that your Social Security number can be compromised and used to claim a fraudulent tax return in your name.
Tip: Checking your credit report regularly for any suspicious activity can be a good way to ensure that your financial information—including your tax return—is safe. Any unusual activity or sudden difference in your credit score could indicate identity theft.