Here's What Happens When You Don't File Your California Taxes

California is known as a laid-back place of beaches and sunshine. But don't get too lackadaisical about paying your California state taxes. If you don't file your California state income tax return -- and don't pay any state taxes you might owe -- you could get hit with painful penalties.

Here's what to watch out for when filing taxes in California -- and how to stay in the good graces of Golden State tax authorities.

Californians get an automatic state tax filing deadline extension

In California, the deadline for filing state income taxes is April 15, 2024, just like for federal income taxes -- but California gives its state taxpayers one extra bonus. Every California taxpayer has an automatic six-month deadline extension to file taxes.

In case you cannot file your California tax return by April 15, 2024, it's OK -- you can wait until Oct. 15, 2024. You don't have to file paperwork, fill out an application, ask permission, or do anything to get this deadline extension.

But here's the catch: You have to pay any California taxes owed by April 15, 2024. Even if you won't be able to file your return until October, try to crunch the numbers using tax software to figure out if you will owe tax to California. If so, you need to pay the balance due by April 15.

What if you don't file California taxes?

If you don't file your California tax return by the extended deadline of Oct. 15, you'll have to pay a delinquent filing penalty. This penalty amounts to 5% of the amount of California state income tax you owe, per month (or part of a month) since the original filing deadline, up to a maximum penalty of 25% of your tax balance due.

As an individual taxpayer, if you owe $540 or less in California taxes and you don't file your state tax return on time, your delinquent filing penalty will be $135 (which is 25% of $540) or 100% of the amount due, whichever is less. For example, if you owe $200, your penalty will be $135. If you owe $134 of taxes, your penalty will be $134.

What if you don't pay your California tax bill?

Paying tax penalties is no fun. But if you're late to pay your California taxes (as well as late to file your state tax return), you might get into even deeper financial trouble. Here are a few more California tax penalties that you could get hit with if you don't settle your tax bill.

Late payment of tax penalty

If you don't pay the amount of California state income tax that you owe by the due date (April 15 for most individual taxpayers), you'll be charged a late payment fee of 5% of the unpaid tax. In addition, you'll be charged a fee of 0.5% of the unpaid tax for each month (or part of a month) it goes unpaid -- for up to 40 months.

For example, if you owe $1,000 of tax on April 15, and you pay it by May 14, you'll owe $55 of late payment penalties.

Bad check penalty

You never want to overdraw your checking account or bounce a check, but especially not when you're writing a check to the state of California. If you try to pay a tax bill but the check gets declined, or you have insufficient funds in your bank account, you'll owe an extra penalty:

• Payment amounts of $1,250 and over: 2% of the payment amount
• Payment amounts of less than $1,250: $25 or the payment amount, whichever is less

For example, if you owe $2,000 of late California taxes and your check bounces, you'll have to pay a penalty of $40. If you owe $1,000, your penalty will be $25.

Collection cost recovery fee

If you fail to quickly pay your overdue tax bill and it drags on so long that the state tax authorities have to take you to collections, that's going to cost you even more. The state of California will charge you a fee of $332 if it has to take involuntary action to collect delinquent taxes.

Liens

As a more extreme and final step, if you do not pay your California taxes, respond to letters from the California Franchise Tax Board, or otherwise deal with your tax debt, the state of California could record and/or file a Notice of State Tax Lien against you. This is bad!

If California hits you with a tax lien, the state basically attaches a big red flag to your credit report. Liens can be attached to your home or other real estate, or personal property like your car or business equipment and assets. California state tax liens can become public record and show up on your credit report, making it harder for you to get approved for credit, buy or sell property such as real estate, or even get (or keep) a job.

The quickest way to get out of a state tax lien is to pay your tax debt in full. Hopefully your tax problems will never get this bad, but if they do, contact the California tax authorities and work out a payment plan. It's not worth wrecking your credit score and losing your job.

Bottom line

State taxes are part of life in the Golden State. If you don't file your return on time and pay your tax bills in full, your life is likely to get more stressful. Pay taxes online at the State of California Franchise Tax Board website.