What Happens if You Miss the Tax Deadline? (And How to Catch Up)

No matter where they live, Americans who earn above a certain threshold must pay taxes they owe by April 15th and if they live abroad, file a tax return by June 15th (unless they’ve already requested an extension).

But what happens if you miss the tax deadline?

While it’s not an ideal situation, you don’t need to panic if you fail to file on time. Many Americans abroad have made this mistake, most often due to a misunderstanding of their tax and reporting obligations. For example, in 2019, the IRS received less than 2 million income tax returns from the estimated 9 million Americans living abroad.

The important thing to do when you’ve realized you’ve missed a deadline is to take action immediately — the sooner you file your taxes, the more likely you are to minimize (or even avoid) penalties and interest.

Below, we’ll walk you through what happens if you miss the tax deadline — and even more importantly, what you can do to make things right.

Missing the tax deadline: Penalties & repercussions

One of the most common questions people have after missing the tax deadline is whether they’ll face any late fines or fees. Unfortunately, this is often the case. While there’s generally no penalty for filing late in cases where you don’t owe tax or are due a tax refund, there will be penalties if you owe taxes to the IRS.

The IRS applies a Failure to File penalty of 5% of the unpaid taxes for each month after your tax return is due, up to 25%. Note that any part of a month you go without filing counts as a full month — even if it’s just one day. So if, for example, you end up filing six weeks late (one month and two weeks), you’ll incur a full two-month penalty of 10%. 

Although the Failure to File penalty maxes out at 25% of the unpaid taxes (after five months), the IRS will at that point levy a .5% Failure to Pay penalty each additional month, also maxing out at 25%. The IRS also charges daily interest on penalties, with underpayment rates currently at 8% per year through March 2025.

Given how quickly these late fees can add up, it’s imperative to file and pay your taxes as soon as possible.

Taking action: Filing a late tax return

You can indeed (and should!) file a tax return as soon as possible after a missed deadline. Doing so will minimize your penalties and interest, allow you to claim credits and deductions you’re eligible for, and generally help keep you in good standing with the IRS. If you’ve paid more in taxes than you owed, you might even receive a refund.

When filing late, you’ll need to file all the same forms as you would if you had filed on time. Typically, this includes Form 1040 plus any additional forms, schedules, and reports your financial circumstance requires.

A few common forms relevant to expats include:

• Form 2555: For claiming the Foreign Earned Income Exclusion (FEIE)
• Form 1116: For claiming the Foreign Tax Credit (FTC)
• Form 8938 (aka the Statement of Specified Foreign Assets): For reporting foreign assets worth over $200,000 on the last day of — or $300,000 at any point during — the tax year
• FinCEN Form 114 (aka the Foreign Bank Account Report or FBAR): For reporting foreign financial accounts whose combined total exceeds $10,000

You can file your tax return in a few different ways:

• E-file: Some expats qualify for electronic filing of their tax return using the IRS Free File system, while others may choose to use an online tax software provider.
• By mail: You can print, complete, and mail the required forms to one of the following addresses:
  • Tax return alone: 

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0215

USA

• Tax return + enclosed payment:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC 28201-1303

USA

• Hire a tax professional: A licensed tax professional can file electronically on your behalf. Hiring an expert is usually the best way to minimize your tax burden and ensure accuracy

Making payments

You can pay any balance you owe to the IRS by:

• Sending a check or money order through the mail
• Accessing IRS Direct Pay or your IRS online account
• Using certain tax software platforms.

If you can’t afford to pay the balance due in full, you may be able to arrange a payment plan. 

There are two types of installment agreements:

• Long-term payment plan (individual): Those who owe $50,000 or less in combined tax, penalties, and interest can make payments via monthly installments over the course of up to 72 months (6 years).
• Long-term payment plan (business): Businesses that owe $25,000 or less in combined tax, penalties, and interest can make payments in up to 24 monthly installments

There’s also a plan that allows you to pay off your bill over 180 days (about six months):

• Short-term payment plan: Those who owe less than $100,000 in combined tax, penalties, and interest can make payments in 180 days or less

Making payments on a payment plan through automatic withdrawals incurs a one-time setup fee of $22, while non-direct debit payments incur a one-time setup fee of $69. Revising a payment plan costs $10.

Reducing & eliminating penalties

In some circumstances, late filers may be able to reduce or even eliminate late filing or payment penalties.

Penalty relief

The IRS offers a number of penalty relief programs that help qualifying individuals reduce or eliminate the penalties they’re facing. There are three main types:

• First Time Penalty Abate & Administrative Waiver: For those who have incurred a penalty for the first time after fully complying with their tax and reporting obligations for at least the previous three years
• Reasonable Cause: For those who attempted to comply with their tax and reporting obligations but were unable to due to circumstances beyond their control
  • Acceptable cause examples: Natural disasters, serious illnesses, payment system errors
  • Unacceptable cause examples: Not knowing how to file, not having enough funds to pay your bill in full, calculation errors, assuming your tax professional had already filed on your behalf
• Statutory Exception: Applicable to those in particular circumstances, such as those who:
  • Received incorrect written tax advice from the IRS
  • Had their timely tax returns marked late erroneously
  • Lived in a federal disaster area
  • Performed military-related work in a combat zone

Appeals

If you believe the IRS was wrong in penalizing you, you can file an appeal. To do so, you must file Form 12009: Request for an Informal Conference and Appeals Review within 30 days of receiving notice of your penalty. This can be particularly challenging for those using a foreign mailing address due to delays in international mail delivery.

An IRS supervisor will review this form first; if they deny your request, you can appeal once more to the Appeals Office within 30 days of your rejection notice.

Typically, the Appeals Office contacts you by phone or mail to assess the situation. You can represent yourself or have an attorney, Certified Public Accountant (CPA), or Enrolled Agent (EA) represent you. If you choose representation, it’s beneficial to select a professional experienced with international tax issues to ensure they are familiar with the complexities of your situation.

The Streamlined Procedure

It’s not uncommon for expats to misunderstand their tax and reporting obligations. That’s why the IRS offers an amnesty program called the Streamlined Foreign Offshore Procedure (aka Streamlined Procedure) for expats who have fallen behind on their taxes. The Streamlined Procedure can eliminate failure to file and failure to pay penalties.

To qualify for the Streamlined Foreign Offshore Streamlined Procedure, you must:

• Have lived abroad for at least one of the last three tax years
• Have a valid taxpayer identification number (TIN) — usually, this will be your Social Security Number (SSN)
• Have failed to comply with your tax and reporting obligations due to non-willful conduct
• Not be under — or generally have ever received — an IRS audit
• Not have already been contacted by the IRS about overdue tax returns

To take advantage of the Streamlined Procedure, you’ll need to:

• File Form 14653
• File tax returns for the last three years you failed to file
• File FBARs for the last six years, if necessary
• Pay your total outstanding tax bill associated with the procedure
• Confirm that your failure to comply was non-willful (aka unintentional)

Get Caught Up With Bright!Tax

Filing taxes late isn’t optimal, but there are steps you can take to get back in the IRS’ good graces. Filing as soon as possible will bring you to compliance and minimize penalties. In some situations, you may even qualify for penalty relief, be able to file an appeal, or take advantage of the Streamlined Procedure to eliminate additional fines.

If you’ve fallen behind on taxes, you don’t have to do it alone!

Resources:

1. If taxpayers missed the deadline to file a federal tax return, the IRS can help
2. Failure to File Penalty
3. Failure to pay penalty
4. Quarterly interest rates
5. Apply online for a payment plan
6. Penalty Relief due to First Time Abate or Other Administrative Waiver
7. Penalty Relief for Reasonable Cause
8. Penalty Relief Due to Statutory Exception
9. What to do if You Disagree with the Penalty