Updated: June 5, 2024

Unfiled Tax Returns: Guidelines and Info on Filing Tax Returns Late

unfiled tax return guide

Every year millions of Americans finish the year with an unfiled tax return or non-filed tax return. Some don’t need to file, but many others forget or ignore the process. Some get confused as to whether they need to file. Wondering if you need to file a tax return? Well, filing requirements vary based on your income and several other factors. Keep reading to look at how needs to file a tax return. Then, explore the links below to learn more about what happens if you don't file a tax return, how to get caught up on unfiled returns, and penalties for unfiled returns.

Do I Need to File a Tax Return?

You must file a tax return if your income exceeds the standard deduction for your filing situation. We have included a breakdown of those numbers below. You also must file if any of the following apply:

  • You earned more than $400 from self-employment, after expenses.
  • You sold your home during the tax year and earned a taxable gain or received a 1099 form related to the sale.
  • You owe taxes on your retirement account.
  • You owe Social Security or Medicare taxes on tips from your employer.

Do I Need to File State Taxes?

Regarding state taxes, every start has different rules, and some states don’t even have an income tax. Therefore, visit the website for your state’s department of revenue to find out if you need to file. In the meantime, you can also learn more about state taxes on our website.


Consequences for Not Filing IRS Tax Returns or Filing Late

If you are supposed to file a federal tax return, but you don’t, you face penalties, interest, and other collection activities. Moreover, the consequences can be severe and financially debilitating.

Consequences for not filing your state return vary based on where you live, but states often use the same collection methods as the IRS. That includes tax liens, wage garnishments, and asset seizures. Furthermore, some states suspend driver’s licenses, real estate licenses and so forth. This link takes a closer look at the consequences of not filing your Federal tax return or filing it late.

Haven’t Filed Taxes in 1, 2, 3, 5, or 10+ Years? IRS Implications by Year

Each year that taxes remain unfiled, the consequences change. Many times it can just mean a loss of a refund, but other times it can lead to serious tax penalties and collection problems.

Know the consequences you may face by year if you owe tax or are owed a refund. If the IRS believes that you owe taxes it is likely that they will file a Substitute for Return on your behalf. This usually will claim you owe more taxes than you should. Even if now taxes are owed, your right to claim a refund goes away after 3 years.

What If You're Self-Employed and Have Never Filed Taxes?

Not filing taxes can impact multiple areas of your financial life. You will struggle to get loans, and if you don't pay and report taxes as a self-employed person, you won't make any contributions to Social Security or Medicare which can affect your future ability to claim these benefits. Additionally, the IRS may discover that you have not filed, and the agency can issue a substitute for return to assess tax against you. 

Failure to Report 1099 Income

If you received one or more 1099s and forgot to include them on your tax return, you could be charged penalties both for your failure to file and for your underpaid taxes. As soon as you realize you have forgotten to include a 1099 form on your tax return, you should take steps to amend your return and pay the past-due taxes. 

Substitute Federal Return

If you don't file your tax return, the IRS may generate a substitute for return (SFR) for you. SFRs show that you owe a tax liability, and if you don't file a return or contest the SFR, the IRS will assess the tax against you. Once this happens, the IRS can start the collection process. SFRs generally show a larger tax liability than you really owe because they don't consider deductions or credits.

How to File Unfiled IRS or Old State Tax Returns

If you have not filed a return, eventually the IRS may create a Substitute for Return (SFR) for you. In other words, the IRS files for you. The IRS usually sends you a letter explaining how they assessed the taxes and a form to consent to their assessment. Hence, you may not want to sign it because the IRS will give you only the standard deduction, one exemption, and no dependents. If you do not sign it, eventually they will assess the balance against you anyway. Therefore, file a tax return yourself, and send it to the IRS as a reconsideration request. This link explains how to file a tax return if you have not done so. The advice applies whether you’ve received an SFR or not.


IRS Failure-to-File Penalty: Penalties for Not Filing a Tax Return

The IRS has a significant penalty for not filing a tax return. Consequently, the IRS assesses a penalty of 5% of your balance for every month your tax return is late. Also, this fine maxes out at 25% of your total tax liability. Take a look at how the IRS calculates this penalty and learn how you can get it erased.

Unfiled IRS Tax Returns: Frequently Asked Questions (FAQs)

Find out answers to commonly asked questions about filing tax returns. Review specifics related to filing your tax return late.

Disclaimer: The content on this website is for educational purposes only and does not serve as legal or tax advice. For specific advice regarding your tax situation, contact a licensed tax professional or tax attorney.

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