What Happens if You Miss the Tax Deadline in 2025

No matter where in the world they live, Americans who earn above a certain threshold must file — and potentially pay — United States taxes. While the typical US tax return deadline is April 15th, US expats have until June 15th (unless they request an extension). But what happens if you miss the tax deadline?

While it’s not an ideal situation, you don’t necessarily 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 realize you’ve missed a tax deadline is to take action immediately. After all, 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 do taxes late.

Impact of missing the tax deadline on tax refunds

Technically, there is no penalty for failing to file a tax return when you don’t owe any outstanding taxes. However, you won’t receive any tax refund until you are caught up on your tax returns. 

Furthermore, failing to file a tax return means that you can’t claim any additional tax relief like the Foreign Tax Credit (FTC), Foreign Earned Income Exclusion (FEIE), or Child Tax Credit (CTC) — among many others.

Waiting too long to file can even cause you to forfeit your tax return, as you can only claim refunds within three years of a return’s due date¹.

Penalties for missing the tax deadline

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 file a late tax return and you owe taxes to the IRS.

How the IRS calculates the late tax filing penalties

If you fail to file a tax return when required, the IRS will levy a Failure to File penalty of 5% of the unpaid taxes for each month that your tax return is late (up to 25%)².

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, you’ll incur a full two-month penalty of 10%.

While the Failure to File penalty maxes out at five months/25%, the IRS will levy an extra .5% Failure to Pay penalty for each additional month the bill goes unpaid³. Like the Failure to File penalty, the Failure to Pay penalty also maxes out at 25%. What’s more, the IRS charges daily interest on penalties. Underpayments carry an annual interest rate of 8% through March 2025.

Certain tax forms incur even higher penalties. For example, accidentally failing to file the Foreign Bank Account Report (FBAR) when required can result in a penalty of $10,000 per report, indexed for inflation. 

Unintentionally failing to file the Statement of Specified Foreign Assets (Form 8938) can also lead to a $10,000 fine, although repeated failure to file can result in an additional penalty of $50,000⁴.

Intentionally failing to file these reports typically results in steeper fines and in particularly flagrant cases, even civil or criminal charges.

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

How to file 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 you stay in good standing with the IRS.

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

A few common forms relevant to expats include:

• Form 2555: For claiming the Foreign Earned Income Exclusion (FEIE), which allows US expats to exclude a portion of their foreign-earned income from taxation — up to $126,500 in tax year 2024, or $130,000 in 2025
• Form 1116: For claiming the Foreign Tax Credit (FTC), which gives US expats dollar-for-dollar US tax credits on any foreign income taxes they’ve paid
• 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 holdings exceed $10,000 at any point in the tax year

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

• Hire a tax professional: Hiring a licensed tax professional is usually the best way to minimize your tax burden and ensure accuracy. And since they can file on your behalf, it’s also by far the least time- and labor-intensive way to get caught up on late taxes
• E-file: Some expats may qualify for free electronic filing through the IRS Free File system, while others may choose to use an online tax software provider
  • Note: Some online tax software providers aren’t designed for certain circumstances that often apply to US expats, including filing separately from a spouse who does not have a Social Security Number (SSN)
• By mail: You can print, complete, and mail the required forms to one of the following addresses⁵:
  • Tax return + enclosed payment:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC 28201-1303

USA

• Tax return alone:

Department of the Treasury

Internal Revenue Service

Austin, TX 73301-0215

USA

Making tax return payments

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

• Sending a check or money order through the mail at the address mentioned above
• 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. If your tax bill is low enough, you may qualify for one of the following long-term payment plans:

• Long-term payment plan (individual): For individuals who owe $50,000 or less in combined tax, penalties, and interest to make payments via monthly installments over up to 72 months (6 years)
• Long-term payment plan (business): For businesses that owe $25,000 or less in combined tax, penalties, and interest to make payments via monthly installments over up to 24 months (2 years)

If your tax liability exceeds those thresholds, however, you will likely need to arrange a short-term payment plan:

• Short-term payment plan: For those who owe less than $100,000 in combined tax, penalties, and interest to 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, on the other hand, costs $10.

B!T note: Because penalties and interest continue to accrue during an installment plan, the total amount you pay over the life of the installment plan will be more than the initial taxes you owed at the time you entered the agreement.

How to avoid common mistakes when filing late taxes

While submitting a tax return late doesn’t necessarily mean you’ll receive an IRS audit, late tax returns do tend to attract additional IRS scrutiny — making accuracy all the more important. And since late tax returns tend to incur penalties, optimizing your tax strategy is crucial.

Taking these steps can help you avoid critical errors when submitting a late tax return⁶:

• Verify your figures & calculations: Errors on your tax return typically require you to file an amended return, which takes significantly more time and effort than simply double-checking your figures. It may also result in the Accuracy-Related Penalty or the Underpayment of Estimated Tax Penalty. The best way to ensure accuracy is to have a professional review your return, but if nothing else, make sure to thoroughly review it yourself
• File all required forms, schedules, & reports: Missing a required form, schedule, or report also typically requires you to file an amended return at a later date. Each taxpayer’s obligations vary, so if you’re not sure of yours, make sure to consult a licensed tax advisor. Some commonly-overlooked forms include:
  • The FBAR & Form 8938: For expats with significant foreign financial assets
  • Schedule A: For those claiming itemized deductions
  • Schedule B: For reporting dividend income
  • Schedule C: For reporting business profits and losses
  • Schedule D & Form 8949: For reporting capital gains and losses
  • Schedule E: For reporting rental and supplemental income
  • Schedule SE: For calculating self-employment taxes
  • Form 5471: For reporting foreign-held corporations
  • Form 3520: For reporting certain gifts and transactions associated with foreign trusts
  • Form 2441: For reporting child and dependent care expenses
  • Form 8283: For reporting charitable donations
  • Form 8606: For reporting non-deductible IRA contributions
• Claim all eligible tax relief: Expat-specific tax relief like the Foreign Tax Credit (FTC), Foreign Earned Income Exclusion (FEIE), and Foreign Housing Exclusion (FHE) can majorly reduce — and often, eliminate — US tax obligations for Americans abroad. On top of that, expats can claim many of the same tax breaks as they would in the US
• Avoid claiming tax relief you don’t qualify for: Claiming tax relief you don’t qualify for can lead to penalties. Again, the best way to take full advantage of all the tax breaks available to you and avoid claiming the ones you aren’t eligible for is to work with a professional tax preparer — but in lieu of that, the IRS’s Interactive Tax Assistant can be a helpful tool.
• Sign your tax return: One of the simplest yet most common mistakes expats make when filing their taxes is failing to sign their return. Unfortunately, doing so renders your tax return incomplete and invalid — which means additional fees may apply until you submit a signed version.
• Double-check your bank account number: If you need to pay an overdue tax bill, make sure that the bank information you enter is correct. Errors will likely result in the IRS failing to withdraw the funds, which can extend late penalties and interest. 
• Maintain records: Even after you’ve submitted your tax return and payments, it’s important to keep records on hand for at least three years in the event of an IRS audit. If you fail to provide records upon request, the IRS may retroactively levy penalties and interest or strip you of prior years’ tax relief. Some documents to keep on hand include:
  • Income statements
  • Investment tax forms
  • Receipts for deductions & expenses
  • Documents that prove your foreign residence (e.g. a residence card, passport with stamps proving travel dates, foreign tax returns, foreign rental contracts)

How to reduce & eliminate late filing penalties

After submitting their tax return and catching up on payments, late filers may be able to reduce or even eliminate late filing and/or payment penalties by utilizing the IRS programs.

Tax filing penalty relief

The IRS offers three main penalty relief programs that may help qualifying individuals reduce or eliminate the penalties they face:

• 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
  • Note: Examples of reasonable cause include natural disasters, serious illnesses, and payment system errors. Unacceptable examples include not knowing how to file, not having enough funds for your bill to be paid in full, calculation errors, and assuming your tax professional already filed on your behalf, among others
• 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

Appealing your late tax return penalty

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.

How the Streamlined Procedure can help you catch up on un-filed taxes

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.

Who can qualify for the Streamlined Procedure

To qualify for the Streamlined Foreign Offshore 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 IRS audit
• Not have already been contacted by the IRS about overdue tax returns

What’s needed for the Streamlined Procedure

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)

How to avoid an IRS late filing penalty in the future

If you need more time to file taxes in the future but don’t want to risk filing late, you can always request an extension. While expats already receive an automatic two-month extension until June 15th, filing Form 4868 gives them an additional four-month extension until October 15th.

B!T note: While Form 4868 gives you an extension on your tax filing deadline, it does not give you an extension on your tax payment deadline. If you expect to owe taxes, you must make an estimated payment by April 15th regardless of when you file your return.

Form 4868 is a brief form consisting of only two parts: 

• Part I: Enter personal information like your name, address, and Social Security Number (SSN)
• Part II: Enter your estimated tax liability, how much you’ve paid in taxes already, and what the difference is (if applicable)

You can file Form 4868 either electronically or by mail. If you will be attaching an estimated tax payment, you’ll mail it to:

Internal Revenue Service

P.O. Box 1303

Charlotte, NC

28201-1303

If you aren’t attaching a payment, address it to:

Department of the Treasury

Internal Revenue Service Center

Austin, TX 

73301-0215

Need even more time to get your taxes in order? You can receive a final extension to December 15th by writing a letter to the IRS.

Get caught up on late taxes 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 up 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. 

And remember, if you’ve fallen behind on taxes, you don’t have to go it alone.

Resources:

1. Filing past due tax returns
2. Failure to File Penalty
3. Failure to Pay Penalty
4. FATCA information for individuals
5. International – Where to file Form 1040 addresses for taxpayers and tax professionals
6. Taxpayers should avoid these common mistakes when they file their tax return