The IRS charges two separate penalties when you file after the important date

If you file your tax return after the April 15 important date (or the extended important date if you requested one), the IRS charges a failure-to-file penalty and a failure-to-pay penalty if you owe taxes. These are calculated differently and stack on top of each other. The failure-to-file penalty is usually larger, so filing even a few days late costs more than paying a few days late.

The exact amount depends on how much tax you owe and how long you wait. Both penalties are percentages of the unpaid tax, not flat fees. If you file late but don't owe anything — because you're due a refund — you face no penalty, though you will lose interest on that refund the longer you wait.

Key Takeaways

  • The failure-to-file penalty is 5% of unpaid taxes for each month you file late, up to a maximum of 25% of what you owe.
  • The failure-to-pay penalty is 0.5% of unpaid taxes for each month you don't pay, also capping at 25% total.
  • If you file late but owe no tax, you pay no penalty, though the IRS will hold any refund you're due until they process your return.
  • Filing late and paying late at the same time means both penalties explore, but the failure-to-file penalty counts first and can reduce the failure-to-pay penalty in some cases.
  • Interest accrues on top of penalties from the original April 15 important date, compounding daily at a rate the IRS sets each quarter.

How the failure-to-file penalty works

The failure-to-file penalty is 5% of your unpaid tax for each month or part of a month that your return is late. This means if you file one day late, you owe 5%. If you file 35 days late, you owe 10%. The penalty stops accumulating once it reaches 25% of your unpaid tax, which happens after five months.

This penalty applies only if you owe tax. If you're due a refund, there is no failure-to-file penalty. The IRS will still process your return and send you the refund, but you will have lost the interest that refund would have earned if you'd filed on time.

The IRS counts a month as a full calendar month or any part of one. Filing on April 16 counts as one month late. Filing on May 1 also counts as one month late. Filing on May 15 counts as two months late.

How the failure-to-pay penalty works

The failure-to-pay penalty is 0.5% of your unpaid tax for each month or part of a month that you don't pay. Like the failure-to-file penalty, it caps at 25% of what you owe. However, this penalty starts from the original April 15 important date, not from when you file your return.

This means you can owe a failure-to-pay penalty even if you file on time. If you file your return by April 15 but don't pay the tax you owe until June 1, you owe the failure-to-pay penalty for May and part of June, even though your return was filed on time.

The failure-to-pay penalty is smaller than the failure-to-file penalty (0.5% per month versus 5% per month), which is why the IRS prioritizes filing on time over paying on time. If you can only do one, filing late is more expensive.

When both penalties explore at the same time

If you file late and owe tax that you don't pay by the important date, both penalties explore. However, the math works in a specific order. The failure-to-file penalty is calculated first and can reduce the failure-to-pay penalty in months when both are running.

For example, if you file three months late and owe $1,000 in tax, your failure-to-file penalty is 15% ($150). During those same three months, your failure-to-pay penalty would normally be 1.5% ($15). But because the failure-to-file penalty is larger, it reduces the failure-to-pay penalty to zero for those months. Once you file, the failure-to-file penalty stops, and the failure-to-pay penalty continues at 0.5% per month for any tax that remains unpaid.

The total of both penalties cannot exceed 25% of your unpaid tax. If your failure-to-file penalty alone reaches 25%, the failure-to-pay penalty does not add on top of it.

Interest compounds on top of penalties

In addition to penalties, the IRS charges interest on any unpaid tax from the original April 15 important date. Interest is not a flat amount — it compounds daily and is calculated as a percentage of the unpaid tax plus any penalties that have accrued.

The IRS sets the interest rate each quarter. As of 2024, the rate is 8% per year, but this changes. You can find the current rate on the IRS website or on your notice. Interest accrues whether you file on time or late, and whether you pay on time or late. The longer you wait to pay, the more interest you owe.

Interest is separate from penalties. You owe both. A $1,000 tax bill filed three months late and paid six months late will include the failure-to-file penalty, the failure-to-pay penalty, and interest on all three amounts.

Penalties are reduced or removed in specific situations

The IRS can remove or reduce penalties if you have reasonable cause. This is not a defined list — the IRS looks at your specific situation. Common reasons the IRS accepts include serious illness, death in your family, fire or natural disaster, or relying on incorrect information from a tax professional.

If you have a history of filing on time and paying on time, the IRS is more likely to grant relief. If you have a pattern of late filings, relief is less likely. You must request penalty relief in writing, usually by sending a letter with your return or by calling the IRS at the number on your notice.

Penalties are not removed automatically. You have to ask. The IRS will not reduce interest, only penalties.

What to do if you filed late

File your return as soon as you can, even if you cannot pay the full amount you owe. Filing stops the failure-to-file penalty from growing. If you owe tax, set up a payment plan with the IRS or pay what you can when ready to reduce the failure-to-pay penalty and interest.

The IRS offers several payment options: pay in full, request a short-term extension (up to 180 days), or set up an installment agreement. You can request these on the IRS website, by phone, or by mail. An installment agreement lets you pay over time, though you will still owe interest and penalties on the full unpaid amount.

If you believe you have reasonable cause for the late filing, include a written explanation with your return or contact the IRS after you file. Keep records of what caused the delay — medical records, death certificates, or documentation of the event that prevented you from filing on time.

Frequently Asked Questions

Do I owe a penalty if I file late but don't owe any tax?

No. The failure-to-file penalty and failure-to-pay penalty both explore only if you owe tax. If you're due a refund, you face no penalty for filing late. However, the longer you wait to file, the longer the IRS holds your refund before sending it to you.

How long do I have before the IRS comes after me for a late return?

The IRS can pursue collection for 10 years from the date they assess the tax, which is usually the date you file your return. However, penalties and interest continue to grow during this time. The sooner you file and pay, the less you will owe in total.

Can I get the penalty removed if I have a good reason?

Yes, if you have reasonable cause. Common reasons include serious illness, death in your family, or a natural disaster. You must request relief in writing and provide documentation. The IRS will not automatically remove penalties — you have to ask.

What if I can't pay the full amount I owe right now?

You can set up an installment agreement with the IRS to pay over time. You will still owe interest and penalties on the unpaid balance, but an agreement stops the IRS from taking collection action. You can request a payment plan on the IRS website or by phone.

Does interest stop accruing once I file my return?

No. Interest continues to accrue from the original April 15 important date until you pay in full, regardless of when you file. Interest is separate from penalties and compounds daily. Paying as soon as possible, even if you file late, reduces the total interest you owe.