Is There a Penalty for Filing Taxes Late if You Get a Refund?

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Most people don’t look forward to doing their taxes, so it might be tempting to put off this chore as long as possible. The Internal Revenue Service won’t penalize you for filing a late tax return when you’re due a refund, but there are still drawbacks if you delay. You can end up costing yourself money if you procrastinate too long or don’t bother to file at all.

IRS Filing Penalties

Late filing and late payment penalties are charged on the amount of unpaid taxes you owe. For this reason, if you are due a refund, there is no penalty for tardiness. When you do owe the IRS, the late filing penalty is 5 percent of the unpaid balance for every month or partial month you are late up to a maximum penalty of 25 percent. The IRS also hits you with a late payment penalty and adds interest on top of that.

Refunds Can Expire

The IRS does not hold refund amounts forever, so it still makes sense to file on time if you have any refund due. You have three years to claim a refund starting on the original date your tax return was due. If you don’t submit a tax return by the three-year deadline, the money becomes the property of the U.S. Treasury.

Good Reasons to File

The refund itself is the most obvious reason to file on time, but the IRS recommends you file even if you had nothing withheld for taxes. For example, you might still qualify for the Earned Income Tax Credit, which could lead to a large refund. You might also need your tax return on record as proof of income if you need a loan or mortgage. If you earned money from self-employment, you must file to receive credit for Social Security earnings. That can increase your benefit amount when it’s time to retire.

How to File Late Returns

You generally file a late return the same way you would if it were on time. However, if you’ve received a past due notice from the IRS, send the return to the address given on the notice. You can get a six-month extension if you submit IRS Form 8648 on or before the April filing deadline. The extension protects you from being charged a 5 percent per month penalty just in case it turns out you owe Uncle Sam.

References

About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

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