Question
Will I be charged interest and penalties for filing and paying my taxes late?
Answer

Yes, when you file your tax return late, you'll be charged interest on any unpaid balance and you may also be subject to failure to file and failure to pay penalties.

Interest accrues on the unpaid balance and compounds daily from the due date of the return (without regard to any extension of time to file) until you pay the balance in full.

  • The interest rate for taxpayers other than corporations is the federal short-term rate plus 3%.
  • The federal short-term rate is determined every three months.
  • For the current quarterly interest rate on underpayments, search "interest rates" in Newsroom Search or "quarter interest rates" on IRS.gov.

Failure to pay penalty is charged for failing to pay your tax by the due date.

  • The late payment penalty is 0.5% of the tax owed after the due date, for each month or part of a month the tax remains unpaid, up to 25%.
  • You won't have to pay the penalty if you can show reasonable cause for the failure to pay on time.
  • 10 days after the IRS issues a final notice of intent to levy or seize property, the 0.5% rate increases to 1% per month.
  • The penalty rate is 0.25% for each month or part of a month in which an installment agreement is in effect.

Failure to file penalty is charged on returns filed after the due date or extended due date, absent a reasonable cause for filing late.

  • The failure to file penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won't exceed 25% of your unpaid taxes.
  • If both a failure to file and a failure to pay penalty are applicable in the same month, the combined penalty is 5% (4.5% late filing and 0.5% late payment) for each month or part of a month that your return was late, up to 25%.
  • The late filing penalty applies to the tax that remains unpaid after the due date. Unpaid tax is the total tax shown on your return reduced by amounts paid through withholding, estimated tax payments, and allowed refundable credits.
  • If after five months you still haven't paid, the failure to file penalty will max out, but the failure to pay penalty continues until the tax is paid, up to 25%.
  • The maximum total penalty for failure to file and pay is 47.5% (22.5% late filing and 25% late payment) of the tax.
  • However, if your return was over 60 days late, the minimum failure to file penalty is the smaller of $210 or 100% of the tax required to be shown on the return.

Note: If you feel a penalty or interest has been assessed in error, you may request abatement. Refer to Publication 1, Your Rights as a Taxpayer.

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