I Forgot To File My Taxes

Every year I meet a couple people who tell me “I forgot to file my taxes.” How do you forget to file???? Here’s the steps to make it all right with the government.

Did you file your taxes this year? Did you know that nearly 10 million U.S. citizens fail to file by April 15th each year? Some avoid filing on purpose, but many just plain forget. So don’t worry. If it slipped your mind, you’re not alone.

If you still have yet to calculate your refund/payment, do this immediately. Even though you’re late, the process is still the same. Get the appropriate forms and gather all of your tax information and either head to your accountant or calculate your taxes yourself (whatever it is that you typically do). Once you know whether you owe money into the government or if you’re getting a refund, you can take the next steps to file.

 

What Is The Penalty?

 

For most of us, we plan on receiving a refund each year. Some of us even plan on getting as much back at $4,000 or more. This shouldn’t really be your goal since you’re basically allowing the government to use your extra money interest free, but that rant is for another article I suppose. If you have always received some money back each year, then you have absolutely nothing to worry about for filing late. There is no penalty. I was actually surprised to learn this, but it makes complete sense. Why should the government charge you if they just get to keep your money a little longer. In fact, they would probably rather that you never filed your taxes!

If, however, you typically owe money into the government each year, then you will most likely have to pay in a little extra for your late payment. There are three types of penalties that you’ll have to pay: Failure to File Penalty, Failure to Pay Penalty, and Interest.

Failure to File Penalty

This penalty occurs because you did not file your taxes by the deadline and you owe money to the government. The amount of money you owe depends on how late you are to file. If you’re a month late, then you owe and additional 5% on top of what you already owe. For each month that it’s late, you have to add an additional 5%, up to a maximum penalty of 25% (if you’re 5 months late or more).

Failure to Pay Penalty

This penalty occurs when you file, but you just don’t pay the amount you owe. The penalty is 0.5% for each month that you have still not paid in full. There is not maximum penalty, so it’s definitely best to pay the full amount as quickly as you can.

Interest

In addition to the traditional penalties, the government also want’s the money back with interest. While this amount changes all the time, it is currently set at 3% interest per year, but it is calculated based on every day that your return/payment is late. Again, it’s best to pay this sooner rather than later.

Basically, to sum it up, if the government owes you money, you have nothing to worry about. Just file your taxes and you’ll receive your check shortly, with no penalty. If you owe money in, then you’ll have to pay quite a few penalties. So, rather than play the “wait and see” game, you should calculate your taxes and file them as soon as possible.

Photo: 401(k) 2013

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Author: Average Joe

A 16 year veteran of the financial planning and financial media circus. Lover of hamburgers and ice cream.

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15 Comments

  1. I never filed my income taxes late, but I have missed a couple bill over my lifetime. I missed them because I never receive the bills. I now have email alerts to remind me.

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    • I’ve received K1′s long after the fact…that’s really annoying.

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    • Can you really “forget?” I’m with you. I can’t sleep until the taxes are done!

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  2. I can’t imagine how anyone would just forget – there are reminders everywhere! But it is usually a huge job so some people put it out of their minds, I guess. I wouldn’t want to be dinged with any of those fees!
    Tushar @ Everything Finance recently posted..How to Prep for a Garage SaleMy Profile

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  3. Seems like there are many build in failsafes by the IRA, but I’d rather not take the chance! Good to know, though!

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  4. Yeah I know a few people who simply forgot to pay om time, but honestly it’s hard to find the time if you have complicated taxes so I can’t really blame them. I know you can file for an extension if you are too busy to file (CPAs and tax preparers do this sometimes I’ve heard). You could be losing money, though, by not filing on time so definitely good to just get it over with.
    DC @ Young Adult Money recently posted..The One Thing Most People Do Not Consider Enough When Choosing a CareerMy Profile

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    • I always file an extension, just to focus on clients-but I work to get them done in May or early June! I can’t imagine “forgetting” although maybe that’s what people say to the IRS or their friends!

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  5. We had a situation once where we mailed our biz taxes on time but the IRS received them 6 months later, and sent us a letter and the penalties, etc. It took just a few phone calls and us sending them a reasonable amount of info to prove that we mailed them earlier (FYI, get a receipt from the post office whenever mailing tax returns), and we were off the hook. Whew!
    Laurie @thefrugalfarmer recently posted..You’re Not Just Paying off Debt, You’re Building WealthMy Profile

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    • Fantastic that you kept the receipt. I would have never thought of that. Then I’d be in jail right now….

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  6. I try to take care of taxes at the beginning of April, but sometimes I’ve slipped up. Good communication is usually all it takes to fix the situation.

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    • …and a good calendar ;-)

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