Penalty for failing to file
Many people who can't afford to pay their taxes make the mistake of choosing not to file a tax return at all. They wrongly think that if they don't file, then the IRS won't have any way of knowing that they owed tax in the first place. Unfortunately, that's almost never true, as most taxpayers have employers who report their earnings to the IRS independently. If the IRS doesn't get a tax return from you but receives an information return (W2/1099) from someone claiming to be your employer, then you can expect it to trigger an audit.
The IRS does its best to discourage failing to file a tax return by setting a high penalty on those who choose not to file. For each month or part of a month that you're late in filing, a 5% penalty is levied and added to your outstanding tax bill. That penalty hits a maximum of 25% within five months of the due date for your return. A separate minimum of $205 applies, although the penalty is never greater than your entire tax bill.
The best and simplest way to buy yourself some time to avoid the failure-to-file penalty is to file for a six-month extension before the original tax deadline in mid-April. That way you'll have until October 15 before the clock starts running on a failure-to-file penalty. Hopefully, that six-month grace period gives you enough time to prepare your return and send it to the IRS.
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