Filing your taxes on time is crucial for maintaining good standing with the IRS. Let's explore what happens if you miss the deadline and how to prevent penalties.

What Is a Failure to File Penalty?

The IRS charges a failure to file penalty when you don't submit your tax return by the due date (including extensions). This penalty adds up over time and can significantly increase your tax burden.

How the Penalty Works

The IRS calculates the penalty at 5% of your unpaid taxes for each month or part of a month your return is late, up to a maximum of 25%. If you're more than 60 days late, the minimum penalty is either $485 (for returns due in 2024) or 100% of the tax required to be shown on the return, whichever is less.

Steps to Prevent Filing Penalties

1. Mark Important Deadlines

Set reminders for:

• Regular tax filing deadline (usually April 15)
• Extended filing deadline if requested (usually October 15)
• Estimated tax payment dates if you're self-employed

2. Gather Documents Early

Start collecting your tax documents in January when they begin arriving. Common documents include:

• W-2s from employers
• 1099s for contract work
• Mortgage interest statements
• Charitable donation receipts

3. Request an Extension When Needed

If you can't file by the deadline:

• Submit Form 4868 by the original due date