What If You Miss a Year Filing Your Taxes?

Tax day 2021​ is Thursday, April 15. But what happens if something prevents you from making the cut this year? The good news is that the IRS won't show up at your door the next day. However, you need to take measures to amend the situation if you've missed the tax deadline for ​2021​.

For example, you have options to request an extension or request a payment agreement. In some cases, you might not even have met the threshold to file your taxes. Take a look at what you should do if you're missing the tax filing deadline.

Three Main Things to Know

Here a look at the three big things you need to know about missing the deadline for filing your taxes:

  1. The IRS will know. The IRS uses sophisticated software to cross-reference payouts to detect when taxpayers haven't filed or paid what they owe. While it may take a few months, a notification from the IRS will be arriving if you skip your taxes.
  2. The IRS is actually very forgiving when it comes to filing late returns or using relief options to get your debt squared away. You really only have to fear the IRS if you're trying to evade your tax duties.
  3. You should definitely file your taxes even if you can't pay what you owe. Many people incorrectly assume that's it's worse to file and not pay than it is to simply skip taxes. This is wrong! Only taxpayers who have filed their taxes are eligible for relief options.

IRS May File for You

One little-known fact is that the IRS may actually file your taxes ​for you​ if you neglect your duty. Far from being a courtesy, IRS-filed returns can actually hurt you by giving you the least favorable outcome possible. Known as substitute returns, IRS-filed returns will assess what you owe based on a cookie-cutter formula instead of applying the most favorable deductions for you.

The IRS actually subtracts the tax credits and deductions that you're entitled to as a taxpayer. Some fees for failing to file are also added into the mix.

Know the Filing Thresholds

As part of changes to the 1099-MISC, the IRS is bringing back the 1099-NEC form for non-employee compensation (NEC) payments for people filing for 2020 in 2021. If you think you make too little to have to file taxes, double check those numbers.

For the 2020 tax year, the filing thresholds are ​$12,200​ for single filers, ​$13,850​ for single filers over the age of 65, ​$24,400​ for married filing jointly, ​$27,000​ for married filing jointly over the age of 65, ​$18,350​ for head of household and ​$20,000​ for head of household over 65. For married filing separately, the threshold is just ​$5​. It's always worth filing even if you don't need to because you may be entitled to tax credits.

Talking Tax Penalties

While penalties are not inevitable, they are in play if you allow your taxes to go unfiled. You'll know that the IRS has gone ahead and filed your taxes for you if you get a "Notice of Deficiency" in the mail. Here's what happens next:

    1. You have a ​90-day​ window to file your taxes on your own or challenge what the IRS has assessed.
    1. Failure to respond means that you give the IRS permission to move forward with its (very unfavorable) assessment.
    1. You're now on the hook for the tax bill that's been assessed by the IRS.
    1. Failure to pay your tax bill moves you into collections. At this point, the IRS is allowed to garnish your wages, bank accounts and assets. In some rare cases, the IRS could seek criminals charges with penalties that include jail time.

Getting Help Paying Your Taxes

Fortunately, your intervention will allow you to tie up your tax problem neatly as long as you respond before the IRS proceeds with its assessment. The IRS has a robust relief program that allows most taxpayers to pay their taxes in increments using installment agreements that are either streamlined payment plans or non-streamlined payment plans lasting 72 months. If you meet the qualifications for being unable to pay what you owe, you may have your debt forgiven, reduced or frozen through an Offer in Compromise (OIC) or Currently Not Collectible (CNC) status.

Asking for a Tax Extension

If you think you'll need more time to get everything figured out by tax day, file for an extension to avoid late penalties. Just keep in mind that the IRS still expects you to pay ​90 percent​ of what you owe by the tax-day deadline. While an extension gives you until ​Oct. 15 of 2021​ to file your taxes, the full tax total due must be in by ​July 15​.