Different Consequences for Different Taxpayers
With the 2025 Tax Deadline Day now behind us, the consequences of missing the filing deadline depend largely on whether a taxpayer is due a refund or owes money to the IRS. While some individuals may have been granted extensions due to natural disasters or filed for one in time, those who didn’t file at all are now considered delinquent.
For individuals expecting a refund from their 2024 tax return, the damage is minimal. The IRS does not penalize taxpayers for late filings when a refund is due. In fact, there is a three-year window to file and claim a refund. However, delaying filing only allows the government to hold on to money that could otherwise be working for the taxpayer. Whether it’s used to pay off debt, invest, or spend, the earlier the refund is claimed, the better. Refunds may take four to six weeks to arrive once filed, even if submitted late.
Owing Taxes Means Penalties, Interest, and Deadlines
The situation is significantly different for those who owe taxes. Failing to file by the tax deadline without an extension can lead to two main types of penalties: the failure-to-file penalty and the failure-to-pay penalty. The more severe of the two, the failure-to-file penalty, accrues at 5% of the unpaid tax amount per month (or part of a month), up to a maximum of 25%. If a return is more than 60 days late, the minimum fine is either $435 or the full tax balance, whichever is less.
The failure-to-pay penalty is milder but still costly. It is calculated at 0.5% per month of the unpaid taxes, also capped at 25%. In addition to these penalties, the IRS charges interest on outstanding tax balances. As of now, the interest rate is 7%, determined by adding 3% to the federal short-term interest rate, and it is compounded daily.
Taxpayers who missed the tax deadline can no longer file an extension, as those must be submitted by April 15 unless an exception applies due to regional disasters. However, those who did file for an extension on time have until October 15 to complete their 2024 returns, provided they paid at least 90% of their estimated tax liability to avoid penalties.
Options for Those Who Can’t Afford to Pay
Being unable to pay owed taxes can be overwhelming, but there are options. The IRS offers payment plans to help ease the burden. For balances that can be settled within 180 days, a short-term plan is available at no extra cost, though interest and penalties still apply. For longer periods, taxpayers can apply for a long-term plan. This costs $31 for automatic bank payments or $130 for other methods. Low-income individuals may qualify for reduced or waived fees.
Alternative financing options include credit cards with 0% introductory APRs—ideal for smaller debts that can be repaid quickly—or debt-consolidation loans, which might carry higher rates than the IRS but offer more flexibility.
Whether you owe money or are due a refund, experts strongly advise filing your return as soon as possible to minimize losses and regain financial control.
