There are a number of reasons people find themselves behind on their taxes. Sometimes life just gets in the way. Unfortunately, the further the deadline recedes in the rearview mirror, the more daunting it can feel to get them in order.
But the sooner you file and start to pay off your taxes, the absolute better — for your pocket and your peace of mind.
If you missed the tax deadline, keep calm and read on. We’ll cover exactly when those deadlines are, what happens if you miss one, and how to get back on track.
What is the IRS deadline for filing and paying taxes?
The deadline for your 2021 taxes is April 18, 2022. (Typically, it's on April 15, but it can be moved if that falls on a weekend or holiday — in this case, Emancipation Day, which is celebrated in Washington, D.C.)
Keep in mind: There’s a difference between filing and actually paying your taxes. “Filing” is submitting the paperwork, while paying means actually sending over the money you owe the IRS.
While the deadline to file and pay your taxes is the same, the penalties for not doing so on time are different. In fact, the penalty for filing late is ten times more than the penalty for paying late. So even if you’re not able to pay your taxes on time — ensure you at least file (or extend) by April 18th!
What are the tax deadlines for self-employed people?
The deadline for self-employed workers to file their taxes is also April 18th.
However, because they don’t have employers taking taxes out of their paychecks throughout the year, freelancers, contractors, and business owners are expected to pay their taxes in quarterly installments. These “estimated payments,” as they’re called, are typically due on:
- April 15th
- June 15th
- September 15th
- January 15th
But if the standard tax deadline is moved, April's quarterly payment deadline will move with it. So the first of this year's tax payments is due on April 18th. For a quick reference, feel free to download our guide to freelancer tax deadlines. A print-friendly version is available as well.
Keep in mind: Quarterly payments are only required for self-employed workers who expect to owe the IRS at least $1,000 for the calendar year. You can figure out when you should be paying — and add reminders to your calendar — with our free quarterly tax calculator.
As with W-2 employees, failure to file or pay taxes on time can result in penalties for self-employed workers. Let’s go over those in more detail now.
What happens if you're late filing taxes?
The consequences of missing a tax deadline can vary. It all depends on whether you’re getting a refund or paying the IRS.
Let’s start with the consequences of missing the filing deadline when you’re expecting a refund.
If you’re getting a refund
Most full-time freelancers don’t get tax refunds — unless they overpaid on their quarterly installments and the IRS is sending money back. However, people who do gig work or independent work as a side hustle might get refunds.
Either way, the only way to get a refund is — you guessed it! — to file your taxes.
While you won’t incur any penalties for filing late if you don’t owe taxes, the longer you wait to file, the more delayed your refund will be. And if your return is three years late, you won’t receive one at all. (The IRS is currently sitting on $1.5 billion in taxpayer refunds that have gone unclaimed by people who haven’t filed their taxes since 2018.)
If you owe taxes
Unsurprisingly, there are more consequences for missing the return deadline when you owe the IRS money. In this case, you really don’t want to be late because you might end up owing a whole lot more. Let’s go over a few potential outcomes of filing late.
You might owe penalties
As mentioned, the IRS charges different penalties for filing and paying taxes after the deadline.
- Failure to file = 5% of the unpaid tax for each month, with a cap of 25% at five months. This means you could end up owing your unpaid taxes + 25% if you file late.
- Failure to pay = 0.5% of the unpaid tax for each month, with a cap of 25% at 50 months. This means you could end up owing your unpaid taxes + 25% if you pay late.
Note that penalties for partial months are rounded up. So if you pay a month and a half late, you’ll be charged two months' worth of penalties.
If you owe both of these tax penalties, the monthly max is capped at 5%. But as you can see, the penalty for failing to file is 10 times more than the penalty for failing to pay.
Say you’re feeling uneasy around tax time because you’re not sure you can afford to pay your in full. In that case, plan on at least filing your taxes and just paying what you can. The penalties will cost you a lot less in the long run.
You may have to pay interest
Another thing to keep in mind: The IRS also charges interest on penalties. The interest rate is the federal short-term rate plus 3%.
The federal short-term rate can change each quarter — keep an eye on updates here! But as of April 1, 2022 it will be 4%, bringing the total interest rate for unpaid taxes to 7%.
There are a lot of numbers to keep track of. If you’re starting to feel a little like the Confused Math Lady, don’t worry. We’re going to use an example to break things down more clearly.
Let’s say Matilda owes $999 in taxes. Matilda doesn’t file or pay her taxes until June 30th — 70 days after the deadline. That’s three months late, in the eyes of the IRS.
Here’s what Matilda will end up owing:
So Matilda owes $163.26 more than she would have if she’d filed and paid by the deadline. And you can imagine how much bigger this number can get for someone who owes more in the first place! In addition, things can get a little more complicated if you’re a freelancer who pays quarterly taxes.
In this example, because Matilda owes less than the $1,000 threshold, she’s only required to pay taxes once a year. (Luckily we’ve got an article specifically about missing quarterly payments!)
You might miss out on benefits later on
As a self-employed person, part of the taxes you pay go towards Social Security and Medicare.
If you don’t file or pay on time, you could end up missing out on retirement or disability benefits down the line.
Your house or car might be a risk
It takes a while to escalate to this level. But if you ignore notice and notice from the IRS, the agency can seize your property, including your house or car, or place a tax lien on it.
That means the IRS would be able to claim any money you make off your property — for instance, by selling your home or vehicle. While this only happens in extreme cases, it's better to avoid this track altogether. Once the IRS has shifted into collections mode, it’s hard to course-correct.
Now we know the potential consequences of missing the tax deadline. However, there are a few situations where you can file late even if you owe tax.
Can you file taxes after the deadline?
There are three common reasons you might be able to file your taxes after the deadline and still not have to pay penalties, even if you owe taxes.
Important note: In all of these scenarios, you still need to pay your taxes by the regular due date. These are just examples of when you can file your taxes late without incurring penalties.
You file for a tax extension
Both options push the deadline to file your taxes back six months — typically to October 15. To buy yourself that extra time to file, you need to submit your request and pay what you owe by the normal tax deadline.
You live abroad
This one applies to people in a very specific financial situation — US citizens and resident immigrants who:
- Are living in another country on the deadline date
- Have their main place of business located outside the US.
If that applies to you, then good news: the IRS automatically gives you a two-month extension to file your tax return. No need to submit a request!
Your new deadline will be June 15th.
You’re in the military or on duty outside the U.S.
Again, the IRS will automatically extend your deadline to June 15th.
With these exceptions covered, let’s go over how to handle things if you miss the tax deadline, didn’t file for an extension, and aren’t eligible for an automatic one.
How to file taxes after the deadline
First of all, take a deep breath. Dealing with the IRS might not make you want to do a happy dance, but when it comes to your taxes, it’s always better to face the music.
Missing a deadline isn’t the end of the world, but the sooner you can get back on top of things, the better. If you haven't file taxes in a few years, things can really balloon.
1. E-file your taxes
Filing your taxes digitally is the quickest way to get your return into the hands of the IRS — and to stop accruing penalties and interest.
There are a number of IRS-approved platforms that allow you to quickly e-file — such as Keeper!
To file your taxes, you’ll need to:
Gather your tax forms
The big ones are your 1099-NEC or 1099-K. You should receive these tax forms from each company or client you did freelance work for. They’ll help you determine your income for the tax year.
Determine the expenses you can write off
If you’re not sure what you should claim, check out our free tax write-off tool! Or text our tax assistants when you use the Keeper app: they can answer your tax questions and help you find write-offs based on what you do for work!
Figure out how much you owe
To make things easier, let Keeper do the work for you with this free 1099 tax calculator! Remember to factor in any penalties or interest you might owe.
2. Apply for an IRS payment plan
If you’re not able to pay off your taxes in full right away, it’s always best to start paying what you can.
Having one of these plans will halt possible penalties and additional interest. Best of all, it won’t cost you any future refunds or affect your credit score — meaning you won’t have any issues when it comes to obtaining loans.
Here's an important thing to keep in mind: there are fees for setting up a payment plan. However, these are waived if your plan is less than 120 days, or if you’re considered low income.
3. Consider using a tax software to stay on top of future tax seasons
If you find yourself missing tax deadlines, you’re not alone. (Remember, the IRS is still waiting on 2018 returns from 1.5 million Americans!)
People might miss the deadline because they’re not aware it’s coming, or because they think they shouldn’t bother filing if they can’t afford to pay (something we now know isn’t true!). Or maybe they just find taxes intimidating — something that’s easier to put off.
At Keeper, we’re all about kicking these problems to the curb. We’re here to help self-employed people feel confident and in control of their taxes, so that next time, you get them done in plenty of time.
Not only does our software help you save money when you file, it also connects you with specialists who can help you decode technical tax lingo in a jiffy. Sign up, and you’ll be able to text with a tax assistantwho can answer your questions and help you find write-offs without crossing the line — protecting you from mistakes, delays, and missed savings.
Sign up for Tax University
Get the tax info they should have taught us in school
At Keeper, we’re on a mission to help people overcome the complexity of taxes. We’ve provided this information for educational purposes, and it does not constitute tax, legal, or accounting advice. If you would like a tax expert to clarify it for you, feel free to sign up for Keeper. You may also email firstname.lastname@example.org with your questions.