Why Filing Without Paying Is Still the Smart Move

Short answer, yes, and here’s a more detailed explanation why…

If tax day is coming up and your wallet says “not today,” you might feel tempted just to skip filing altogether. After all, what’s the point of sending in a return if you can’t pay?

Honestly, it’s really important to file your taxes on time, even if you’re unable to pay anything right now. Doing so can save you from unnecessary complications.

Why? Because the penalty for not filing is way worse than the penalty for not paying. The IRS charges a late-filing penalty that’s about ten times higher than the penalty for paying late. So by skipping the return, you’re actually digging a deeper financial hole than if you filed and dealt with the payment later.

Let’s say you owe $5,000. If you don’t file, the IRS adds 5% of that amount to your bill every month, up to a maximum of 25%. That’s $1,250 in penalties just for not turning in the paperwork. But if you file and pay late, the penalty is just 0.5% per month. That’s only $125 for the same five months. Filing could save you over a thousand dollars right off the bat.

Still with me? Good, because that’s just the beginning…

Filing = More Options

Filing your taxes on time is a great way to keep your options open. The IRS is more willing to discuss payment plans or settle for less (through an Offer in Compromise) once your returns are filed. It shows you’re making an effort to do the right thing, which can actually help you during negotiations.

Ignore your filing duties, though, and the IRS might file for you using a “substitute return.” That’s basically a worst-case scenario, no deductions, no business expenses, and usually a much higher tax bill than you’d end up with if you filed yourself.

What About Filing an Extension?

Extensions are great for more time to gather paperwork, but they don’t give you extra time to pay. Your tax is still due on April 15. So yes, get an extension if you need it, but don’t expect it to magically freeze penalties or interest.

Even with an extension, the IRS starts charging interest the day after taxes are due.

Pay What You Can (Even If It’s Not Much)

If you can afford to send something with your return, even $100, do it. It’ll help reduce your penalty and interest charges. After that, you can work with the IRS on a monthly payment plan. They’ll usually allow you to pay over time, especially if this is your first issue.

Can’t pay even on a plan? If your income is really limited and you don’t have assets the IRS can tap into, you might qualify for an Offer in Compromise. It’s not easy to get approved, but it can be a lifesaver in the right situation.

Need Professional Help?

Not filing because you can’t pay is a trap, and it only makes things worse. File the return. Show the IRS you’re trying. Then deal with the payment part.

And if you need help figuring out your next steps, we’ve got you. We help small business owners and self-employed folks like you with set up plans, talk to the IRS, and find a way forward.

Let’s talk. Your tax problem won’t fix itself, but we can help. Send me a message now!