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What to Do If You Haven’t Filed Your Tax Return

Lauren Brown Updated: June 27, 2023 • 7 min read
unfiled tax returns

The complexity of taxes can cause people to miss filing their return before the deadline. If this is you, there is no need to panic. It is a more common scenario than you might think, and there are remedies to handle unfiled tax returns. You should, however, take immediate action. Not completing your taxes over an extended period can lead to serious ramifications.

What to Expect When You Haven’t Filed Your Taxes

Understanding what happens if you don’t file your taxes and the steps you can take to manage your returns is crucial to keep your financial situation in check. Despite the initial stress, the key is addressing the issue by filing right away rather than avoiding it altogether.

If you have not yet filed, here are a few steps to anticipate:

  • Contact from the Internal Revenue Service (IRS): The IRS will send you multiple notices reminding you to complete your tax return.
  • IRS may file a substitute return on your behalf: If you do not file after receiving notice from the IRS, the agency may file your return on your behalf, calculating your taxes and associated late penalties.
  • Your return may not be accurate: When the IRS files your taxes for you, it often leads to a higher tax bill. This is because the substitute return typically does not consider all the tax credits, deductions, and exemptions you might be eligible for. 

What are the consequences of a substitute filing? 

If the IRS completes a substitute return, you are responsible for paying the amount owed based on their calculations. Many Americans will still complete their own return even if the government agency has already done a substitute. This ensures the fairest filing and possibly a lower tax bill. Submitting your own return is especially beneficial if you are eligible for a refund, as you will not receive money back from a substitute filing. You also risk losing the tax refund if you do not file within three years of the due date. Remember, just because you have not filed your back taxes does not mean you are exempt from paying them.

if you haven't filed your taxes

Consequences of Not Filing a Tax Return

For anyone who has found themselves thinking, "if I didn't file taxes, what could possibly happen?” you might want to consider the range of potential consequences. Unfiled tax returns can lead to several negative impacts, including the following:

No tax refund 

If applicable, you have a three-year window from the original tax return deadline to claim your money. Once this period passes, you forfeit the money and lose the ability to claim the refund.

Loss of tax credits

Just like refunds, certain tax credits are only available if you file your tax return within three years. This is true for the Earned Income Tax Credit, for example, a refundable credit for low-to-moderate-income working individuals and couples, particularly those with children.

Failure-to-file penalty

Not submitting your tax return on time causes the IRS to impose a failure-to-file penalty. The charge is 5% of the unpaid taxes for each month of a late tax return. The calculation starts accruing the day after the tax filing due date and reaches a maximum of 25% of the back taxes. This can add a significant amount to your tax bill, and that is before accounting for interest owed on the balance. If you are entitled to a refund, the failure-to-file penalty is not applicable.

Bankruptcy complications

Unfiled tax returns can make applying for bankruptcy more complicated. One of the requirements for bankruptcy is being up to date with your taxes. Depending on the type of bankruptcy, you will need to have completed the prior two to four years of tax returns. 

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Issues applying for loans

Unfiled tax returns can also create obstacles for loan applications. Many lenders require recent tax return information to process mortgage applications, personal loans, and business loans as confirmation of your income level. Not having this information can delay or potentially disqualify you from being considered for a loan or even specific credit cards. Read more here: Can You Pay Taxes With a Personal Loan?

Tax liens

If you have unpaid tax debt, the IRS may place a tax lien on your property as part of the collection process. This legal claim against a specific asset typically remains until you pay off the liability or meet the lien withdrawal requirements. If you sell the property before paying off your tax debt, the IRS can legally keep the necessary proceeds to cover your outstanding back taxes.

Tax levies

One of the harshest consequences is that the IRS can use a tax levy to seize your property to cover your tax debt. This enforcement action allows everything from garnishing wages by withholding your paycheck to taking the money in your bank accounts. The IRS may also sell your vehicle, real estate, or other property through tax levies to cover your back taxes if necessary. The main difference between a tax lien and a tax levy is whether the government can seize your property or simply has a claim against it. 

can you get tax credit with late filing

How Many Years Can You File Back Taxes?

The IRS only allows up to three years to claim a refund, though with owed taxes, filing as soon as possible helps to limit penalties and interest.

Regarding the question “how far back can you file taxes,” completing all unfiled tax returns is often the safest solution. Not doing so can lead to financial consequences and complications in resolving your tax situation.

Neglecting your tax filing responsibilities can lead to difficulties in your financial life. Consider tackling any issues now by filing the return, even if you can not afford to pay the owed amount.

Arrangements with the IRS can help manage your tax debt if needed. The important part is working with the agency to ensure you do not experience the consequences of not filing.

Step-by-Step Instructions: What To Do if You Have an Unfiled Tax Return

Having unfiled tax returns can seem overwhelming, but you can get on track with a systematic approach. Here are the steps you may want to consider when completing your back taxes:

  1. Contact a tax professional: Consulting with an accountant or tax professional is often helpful when dealing with unfiled tax returns. They can guide you through the process, offer recommendations on tax credits and provide advice tailored to your specific situation.
  2. Gather all documents: Locate all relevant financial records, including W-2s, 1099s, expense receipts, and previous returns. If you have misplaced any documents, you can request copies.
  3. File your return immediately: Once you have your documents, consider preparing and filing your back taxes as soon as possible. This will halt further penalties and interest accumulation, and you may even be eligible for penalty relief. 
  4. Reach an agreement with the IRS: If you owe taxes but cannot afford to pay the total amount right away, you can apply for an installment agreement with the IRS. This allows you to pay your tax debt over time, helping you manage the financial burden.
  5. Consult a tax relief expert: If you are facing a substantial tax debt or other complexities, you may want to consider reaching out to a tax relief expert. These professionals specialize in negotiating with the IRS on behalf of taxpayers. They can help you explore other options, such as settling your tax debt for less than you owe.

Not addressing back taxes will only lead to more complications. Even if you have years of unfiled tax returns, taking action can save you additional stress and expenses in the long run.

What Happens if You Can’t Afford to Pay Your Taxes

If you cannot afford your tax bill, there are multiple routes you can consider. One of the most common options is reaching a resolution directly with the IRS. The government agency offers several payment programs, including installment agreements or payment plans, which allow you to pay your owed taxes over a set schedule. It is also possible to reach a compromise with the IRS where they agree to accept less than the total amount in exchange for a lump sum payment. 

Alternatively, if navigating these arrangements seems overwhelming, you may consider engaging a tax resolution agency. These professionals offer guidance and help navigate the complexities of settling your tax matters with the IRS.

Regardless of your financial situation, filing your taxes late is more beneficial than not filing. The penalties associated with unfiled tax returns tend to be harsher than those for non-payment. Submitting your return could help limit the consequences and demonstrates to the IRS that you are committed to fulfilling your tax responsibilities.



Wondering what happens if you don’t file your taxes can be stressful, but getting caught up on your back taxes does not need to be a daunting endeavor. The consequences of not filing are significant, often leading to penalties, with a late tax filing being better than none at all. The key is to approach the matter head-on: promptly seeking help from tax professionals and acting decisively to stop further negative fallout. 

Ignoring your unfiled tax returns does not make them disappear or prevent you from owing the amount due. Instead, consider resolving your tax situation to boost your overall financial well-being.

Written by Lauren Brown linkedin-icon

Lauren has over a decade of experience in wealth management and financial planning. She is a CFA charterholder and holds a Bachelor's degree in Finance. Lauren has worked with several asset management firms, offering wealth advisory and portfolio management services to high-net-worth clients.