What Happens If You Don’t File Taxes but Don’t Owe Anything?
Just because you don’t owe any taxes doesn’t mean you don’t need to file a tax return. Instead, the IRS uses other measures—mostly based on your income—to see if you need to file taxes.
Normally, if you don’t file your tax return, you’ll pay penalties based on your unpaid tax. However, if you don’t owe tax, you won’t pay any penalties for not filing—but you could be missing out on money the government owes you in the form of a refund. Here’s everything to know.
What happens if you file your taxes late but don’t owe anything?
The IRS doesn’t charge penalties if you file your taxes late—if you don’t owe anything. (If you find that you do owe taxes, the penalties and interest can be hundreds or thousands of dollars, depending on how late you are and how much you owe.)
Instead, if you file your taxes late but don’t owe anything, you run a different kind of risk: that you’re losing out on money the IRS owes you. Consider this: in 2024, about 64% of tax filers actually got money back in the form of a refund from the government. The average refund amount was $3,138.
That’s a lot of money that you could be missing out on if you don’t file your taxes. And while the government’s pretty serious about making sure you file and pay your taxes, they’re not so generous if you’re late to claim your due.
You can still qualify for a refund if you file your taxes late, but only up to a point: Two to three years, to be specific. After that, you won’t be able to get a tax refund, no matter how much the IRS owes you. (In contrast, the IRS has up to 10 years to come after you for unpaid taxes.)
Is there a failure-to-file penalty if no tax is due?
No. If you don’t file your taxes—and don’t owe anything—the IRS won’t charge you a penalty. But they also won’t pay you any refund you’re due, either. And unless you actually sit down to fill out your tax return, you can’t know in advance whether you’ll owe taxes or not.
That’s because even if you’re not working a regular job, you might owe taxes for other things, like selling your home, receiving Social Security benefits, or doing a side hustle. It’s not safe to assume that you won’t owe taxes just because you didn’t work throughout the year at a normal job.
In fact, if you find out that you do owe taxes and didn’t file, you could face two different penalties: a failure-to-file penalty and a failure-to-pay penalty.
Together, these penalties tack on an extra 5% of your unpaid taxes each month, up to a maximum of 25%, plus interest. Tax returns filed 60 days late or more are charged even higher fees.
Why should you file your taxes if you don’t owe anything?
If you’ve actually checked that you don’t owe any taxes by filling out a tax return (Form 1040), it’s up to you whether you actually send it in. It’s optional if you don’t owe anything. But here are four good reasons why you should:
- Get a tax refund: 64% of tax filers in 2024 didn’t owe anything either, but by filing their taxes, they received an average refund to the tune of $3,138. Many tax credits are available even if you don’t earn any income, like if you have kids or go to college.
- Social Security benefits: Your future Social Security payments are calculated based on the average of your 35 highest-earning years, as reported on the tax returns you file with the IRS. If you don’t file your taxes, your income for the year may not count toward calculating your future benefits.
- Qualify for certain benefits: Many income-limited programs rely on using your tax return filings to prove that you’re eligible for help, such as for homeownership assistance, federal financial aid for college, income-driven repayment plans for student loans, or support after a natural disaster.
- Take out a loan: Regardless of your income level, most lenders—for just about any loan—will want to see proof of your income, and your completed tax returns are the easiest way to do that. That’s especially true if you’re self-employed.
I always recommend filing your taxes. As noted, they can come in handy for many things from loan qualifications to income verification and more. If you don’t owe taxes, there is no harm in filing them just to have them in the event they are needed, while not filing them may lead to missing out on tax refunds you didn’t know you were due. There are even free programs available to file your taxes if your income is low enough and you are claiming little or no deductions. The IRS provides these options.
What to do if you haven’t filed your taxes
The tax filing deadline each year is generally April 15. If that date hasn’t yet passed, you’re in luck: you can quickly and easily file for a free extension online using the IRS Free File tool, or by filling out Form 4868. This gives you an automatic six-month extension to file.
However—and the IRS is very clear about this—an “extension of time to file is not an extension of time to pay.” If you file your taxes late and don’t owe anything (or, better yet, get a tax refund), then you don’t need to worry about this.
If you do end up owing taxes, though, then you’ll only be charged the failure-to-pay penalties we talked about earlier, not the failure-to-file penalties. Luckily, these are much less (0.5% of your unpaid tax bill, per month, up to a maximum of 25%). If you can’t pay your taxes, you can always set up an affordable payment plan.
If you’ve missed the filing deadline, you can still file those past tax returns, but you can only claim a refund for the past three years. And if you don’t file those taxes at all, the IRS can even do it for you based on the income that your employer and other sources report. If that triggers a tax bill, it can come after you for payment.
How to get help with unfiled taxes
If you’re staring at an IRS notice or you know that you haven’t filed your taxes when you probably should, don’t panic; you’re not the first person to be in these shoes. Here are some workable options to help you out:
- Hire an accountant: The best way to get personalized support for your specific situation is to hire an accountant and be honest with them about your situation. They’ll help you zero in on exactly what needs to be done and what types of assistance you qualify for.
- Seek free tax clinic: You’ll find independent Low Income Taxpayer Clinics in each state, and many local governments and nonprofits offer free tax help for those who can’t afford to hire a tax firm.
- Taxpayer Advocate Service: This group is part of the IRS but operates independently, offering support for individuals navigating challenges with unpaid taxes.
- Hire a tax lawyer: Tax debt can get into some thorny legal issues, particularly if it’s for a very large amount. Hiring a tax lawyer can help you resolve these issues.
- Work with a tax debt relief company: Some companies will help you settle your tax debt for less than you owe, but be careful to research this option carefully and choose the best tax relief companies because there are many scammers out there. Anthem Tax Services, for example, is the top-rated company according to our research. It has enrolled agents, attorneys, and case managers on staff who negotiate with the IRS on your behalf to help settle your tax debt. You do pay a settlement fee for these services that cut into your savings, but it can be a tremendous help for those facing a large debt burden.
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