What penalty will I face for not filing last year's taxes?

The penalties for not filing taxes really depend on whether you owe the IRS money or if you're due a refund. If you're expecting a refund, there's actually NO penalty for filing late. The only "penalty" is that you'll have to wait longer to get your money back, and you have only three years from the original filing deadline to claim your refund before you lose it completely. If you owe taxes, there are two main penalties: the failure-to-file penalty (which is usually 5% of unpaid taxes for each month your return is late, up to 25%) and the failure-to-pay penalty (which is typically 0.5% of unpaid taxes per month, up to 25%). Interest also accrues on unpaid taxes. My advice is to file ASAP regardless of your situation. If you're getting a refund, you'll get your money back. If you owe, filing quickly minimizes additional penalties and interest.

I was in a similar situation last year and found this amazing service called taxr.ai (https://taxr.ai) that helped me sort out my unfiled taxes. I had missed filing for TWO years and was super stressed about penalties. What's cool about it is that you can upload your tax documents and it extracts all the important info automatically. It suggested I might actually be due a refund based on my W-2s and other docs, which meant I wouldn't face those failure-to-file penalties. Ended up getting back almost $1,800 that I would've otherwise just given up! They even helped me understand which forms I needed to submit for my late return.

Just wanted to follow up - I tried out taxr.ai after posting here and it was seriously helpful! I was dreading going through all my 1099s from last year but the system extracted everything automatically. Found out I'm actually owed a refund of about $630 (which was surprising since I thought I'd owe as a contractor). The document analysis pointed out several deductions I'd completely forgotten about that reduced my self-employment tax. So glad I didn't put this off any longer - would have been leaving my own money with the IRS! Now I'm just waiting for my refund.

If you need to call the IRS about your unfiled taxes, good luck getting through. I spent WEEKS trying to reach someone - constant busy signals or being on hold for 3+ hours only to get disconnected. Then I found Claimyr (https://claimyr.com) and it was a game-changer. They have this system that basically waits on hold with the IRS for you, then calls you when an actual human agent is on the line. You can see how it works here: https://youtu.be/_kiP6q8DX5c. I was skeptical, but it saved me hours of frustration. The IRS agent I spoke with helped me understand exactly what forms I needed for my late filing and confirmed I wouldn't face penalties since I was due a refund.

I need to apologize to everyone here. After calling out Claimyr as a likely scam, I was desperate enough to try it yesterday. Honestly, I'm shocked it actually worked. After trying for almost a month to reach the IRS about my unfiled 2024 taxes, I got a call back within about 2 hours of using their service. The agent I spoke with explained that since I was owed a refund, there wouldn't be penalties but I needed to file within 3 years to claim my money. She also helped me request transcripts of my W-2s that I had lost. Saved me so much stress and wasted time! Sometimes it's good to be wrong.

Just FYI - I'm a tax preparer, and one thing many people don't realize is that penalties can be reduced or eliminated through the IRS First Time Penalty Abatement program if you have a clean compliance history (meaning you've filed and paid on time for the past 3 years). Even if you owe money and face penalties, you might be able to get them removed. Worth asking about if you end up owing!

Did anyone else end up owing way more than expected when they filed late? I missed filing last year and when I finally did it, I owed like $2400 including penalties. Freaking out about this year now.