 TITLE: Here’s What to Do If You Can’t Pay Your Taxes CONTENT: How Does Not Paying Taxes Hurt Your Finances?\n---------------------------------------------\nAvoiding a tax bill and opting not to pay—or not filing at all when you're required to—won't cause the IRS to forget about what you owe. In fact, ignoring a tax bill can lead to high penalties and accrued interest that greatly increase the amount you'll ultimately have to pay back. For example, if you don't file by the federal deadline (which the IRS extended to May 17 this year) and it turns out you owe tax, the IRS will charge you 5% of the unpaid tax you owe per month for up to five months, to a maximum of 25%. If you file more than 60 days late, you'll pay a minimum late filing fee adjusted annually ($435 for tax returns filed in 2021), or 100% of the unpaid tax as a penalty—whichever is less.\nYou'll also pay a penalty if you do file your return but don't pay the taxes you owe by May 17. That penalty is 0.5% of the unpaid balance per month for up to five months, up to a maximum of 25%. The penalty rises to 1% per month if you don't pay within 10 days of receiving a notice that the IRS may levy your property, meaning it may seize your property (including cash savings and retirement accounts) or garnish your income. The IRS may also file a lien against property you own in order to establish their claim against it. When a lien is in place, the IRS can collect part of the proceeds to pay off the tax debt if you sell the property.\nA tax lien could also affect the likelihood you'll qualify for credit in the future. Tax liens won't be placed on your credit report, so lenders won't be able to see the lien simply by performing a credit check. The lien itself won't affect your credit scores, either. However, some lenders, particularly mortgage lenders, may perform a public records search during the application process, and the lien will be visible there. That could prevent you from qualifying for a loan.\nThen there's interest on unpaid tax: You'll pay the federal short-term interest rate (0.12% as of February 2021) plus 3% from your filing deadline to the date the tax is paid. For the first quarter of 2021, the interest rate for individuals is 3%. END