I Haven’t Paid My 2020 Taxes. What Do I Do?

Our editor-in-chief gives her two cents to a late tax filer

Headshot of Kristin Myers between illustrations of people.

Dear Kristin,

I didn't file my taxes for 2020 yet. How do I get started to fix that? What's it going to cost me?

Sincerely,

Back Taxes

Dear Back Taxes,

Yikes! Filing for 2021 taxes has already begun, so you’re going to want to fix this ASAP. The government is always happy to recoup any money you owe it, so this is a situation that you can solve. It’s always better to file late, than not at all!

I’m going to assume you haven’t filed your taxes on either the federal or state level, so I’ll go through them separately below. 

Let’s start with the good news. You won’t pay a penalty if you are entitled to a tax refund. As far as the government is concerned, you paid your taxes and are only hurting yourself by delaying payment for money you are owed. And to that point, if you are owed money, file those taxes right away so you can get it back as soon as possible—that refund could be gone if you wait too long.

But there is bad news if you owe the government money in unpaid taxes. The longer you wait to file, the more you owe in fees and penalties. The IRS charges a Failure to File Penalty that costs 5% of the unpaid taxes each month, up to a maximum of 25% of the unpaid taxes. And if your tax return is over 60 days late—which it is in this case—that penalty is a minimum of $435 or 100% of the tax required on your return, whichever is less.

And if you file but don’t pay your tax bill, the IRS will charge you a Failure to Pay Penalty in the form of interest on the unpaid taxes: 0.5% each month, up to 25%. The maximum the IRS will charge for both failing to file and failing to pay is 47.5% of the unpaid taxes.

I should also mention that in addition to this, the IRS is allowed to levy or seize property you own to collect on your tax debt. Once it does that, the Failure to Pay Penalty jumps from 0.5% per month to 1% per month.

Similar to your federal taxes, you can file your state taxes late as well. You told us that you live in New York, and the penalties in that state mirror those of the IRS: 5% of the unpaid taxes per month for filing late, up to 25%, and a penalty of 0.5% each month, up to 25%, for failing to pay on time. And if your New York state tax return is more than 60 days late, your penalty will be $100 or the total amount of taxes due on the return, whichever is less.

So you’re going to want to file those taxes immediately—and you might as well do your 2021 taxes while you’re at it since it is tax season after all. You don’t want to be in this situation again! If you don’t file, the IRS could file for you, and might not give you all the tax credits and deductions you are entitled to receive. So how do you do it?

Unfortunately, you can’t take advantage of the IRS Free File for back taxes. While it’s a way to file your taxes for free directly online with the IRS, it’s only available for the current tax filing season (so you can use it for your 2021 taxes, if you’re eligible). You’ll have to go to a registered tax preparer if you want to file your past year’s return electronically, and that’ll cost you. If you want to prepare your back tax return yourself, you’ll have to file it the old-fashioned way: print, sign, and mail it to the IRS and state. And be sure you use the form for that year!

In the future, if there’s a reason you can’t file your taxes on time, request an extension. It could save you from a lot of the problems that come with filing late and no explanation to the government at all.

Good Luck!

-Kristin

If you have questions about money, Kristin is here to help. Submit an anonymous question and she may answer it in a future column.

Article Sources

  1.  IRS. “Failure To File Penalty.” Accessed Feb. 3, 2022.

  2. IRS. “Collection Procedural Questions 3: Question: Will I be Charged Interest and Penalties for Filing and Paying My Taxes Late?” Accessed Feb. 3, 2022.

  3. IRS. “Failure To Pay Penalty.” Accessed Feb. 3, 2022.

  4. New York State Department of Taxation and Finance. “Interest and Penalties.” Accessed Feb. 3, 2022.

  5. IRS. “IRS Free File: Do Your Taxes for Free.” Accessed Feb. 3, 2022.