The large percentage of people who don t owe federal income tax is a feature, not a bug, of the revenue code, write the Tax Policy Center s Philip Stallworth and Daniel Berger. By design, the federal income tax always has excluded a significant fraction of households through a combination of personal exemptions, the standard deduction, zero bracket amounts, and more recently, tax credits.
According to the Tax Policy Center s 2018 estimation, nearly 99 million Americans were expected to file a tax return in 2020. That figure may increase due to the pandemic, however, since people are being asked to file a tax return to claim unpaid stimulus checks, even if they aren t required to based on income.
What is the penalty for filing taxes late?
The good news is that if you re expecting a tax refund and don t file your federal income tax return on time, there s no late charge. The bad news is that you won t get your refund until you file. You have three years from the due date of your tax return to file and claim your refund. After that, the money goes back to the US Treasury.
But if you
owe taxes and fail to file your return, the IRS essentially starts a running tab in your name. Every 30 days, you ll be charged 5% of any unpaid tax you re required to report on your return. Even if you file within a few weeks of the deadline, the full month penalty still applies.