What penalties and interest will I be charged for paying and filing my federal income taxes late?
If you fail to file your federal income tax return and pay your tax by the due date, you may have to pay one or more penalties, plus interest. Although you are allowed an automatic extension for filing your return if you mail in the appropriate form, you are not allowed an extension for paying your taxes. Interest is charged on any unpaid tax from the due date of your tax return until the date of payment. The interest rate is determined every three months.
- Filing late: If you do not file your return by the due date (including extensions), you may have to pay a failure-to-file penalty. The penalty is based on the tax not paid by the due date (without regard to extensions). The penalty is usually 5 percent of the tax due for each month or part of a month that a return is late, but not more than 25 percent. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. (Exceptions: You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not because of willful neglect. Also, you will not be subject to a late filing penalty if you do not owe any tax.)
- Paying tax late: You may have to pay a failure-to-pay penalty of one-half of 1 percent of your unpaid taxes for each month (or part of a month) the tax remains unpaid. The penalty can increase to 1 percent if you've been sent several notices to pay the overdue tax and still have not paid. In general, this penalty cannot be more than 25 percent of your unpaid tax. You may not have to pay the penalty if you can show that your failure to pay was due to reasonable cause and not due to willful neglect. This failure-to-pay penalty is added to interest charges on late payments.
- Combined penalties: If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is typically reduced by the.5 percent failure-to-pay penalty. However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You may not reduce the failure-to-file penalty by the failure-to-pay penalty.