Missing the federal tax payment deadline triggers a 0.5% monthly penalty on the unpaid amount, plus interest, capped at 25%. Missing the filing deadline is ten times worse. The damage compounds quietly until you act.
The IRS treats late filing and late payment as separate offenses with separate penalties. Knowing which one applies to your situation determines how fast the cost grows.
Applies when you filed your return on time but did not pay the full balance. The penalty is 0.5% of the unpaid tax per month or part of a month, capped at 25% total. After an IRS notice with intent to levy, the rate jumps to 1% per month.
How to limit it: Pay as much as you can, then set up an installment plan.
Applies when you did not file the return at all (and did not request an extension). The penalty is 5% of the unpaid tax per month, capped at 25%. Minimum penalty after 60 days is the lesser of $510 or 100% of the unpaid tax.
How to limit it: File the return immediately, even if you cannot pay yet.
Imagine you owe $5,000 and miss the April 15 deadline. You did file the return on time, so only the failure-to-pay penalty applies. Here is how the bill grows if you do nothing.
Numbers are approximate and assume a constant 8% annualized interest rate, which actually adjusts quarterly. If you also failed to file, multiply the penalty column by 10 for the first five months, then it caps at 25%.
A reminder costs nothing. The penalty for missing the next deadline could cost hundreds or thousands. The form below defaults to the next federal Tax Day. Change the date if you need a different one.
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The failure-to-pay penalty is 0.5% of the unpaid tax for each month or part of a month that the tax is not paid, up to a maximum of 25% of the unpaid balance. It is calculated from the original deadline, not from when the IRS notices.
Yes, and the failure-to-file penalty is much worse. It is 5% of the unpaid tax per month, also capped at 25%. If both penalties apply in the same month, the failure-to-file is reduced to 4.5% so the combined rate is 5%. Filing on time matters even if you cannot pay yet.
The IRS interest rate adjusts quarterly and is set at the federal short-term rate plus 3 percent. In recent years it has been around 7 to 8 percent annualized. Interest accrues on the unpaid tax and on any unpaid penalties, compounding daily.
File on time and request an installment agreement. The IRS approves most short-term plans (up to 180 days) and long-term monthly plans automatically through the online application. You will still owe penalties and interest, but the failure-to-file penalty is avoided and the rate drops once you are on a plan.
You receive a CP14 notice first, asking for payment. If you ignore it, follow-up notices escalate over months and can lead to liens, levies, or wage garnishment. Most people who respond and engage with the IRS avoid the worst outcomes, even if they cannot pay in full immediately.
Yes. Set a reminder for the next deadline now. The form on this page defaults to next year. You will get an email 7, 3, and 1 day before, plus one on the day. The penalty avoided pays for years of reminders, since the reminders are free.
Free tax deadline reminder. No account, no app. Get an email 7, 3, and 1 day before — and follow-ups if you have not paid.
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