The IRS charges two separate penalties when you file after the deadline

If you file your tax return after April 15 (or the extended deadline if you requested one), the IRS charges a failure-to-file penalty and a failure-to-pay penalty. These are calculated differently and stack on top of each other. The failure-to-file penalty is usually steeper, so filing late even without paying is more costly than paying late while filing on time.

The exact amount depends on how late you file, how much tax you owe, and whether you have a valid reason for the delay. If you owe nothing or are getting a refund, the failure-to-file penalty does not apply — but you still lose money by not filing, because refunds expire after three years.

Key Takeaways

  • The failure-to-file penalty is 5 percent of unpaid taxes for each month you are late, up to 25 percent total.
  • The failure-to-pay penalty is 0.5 percent of unpaid taxes per month, also capping at 25 percent.
  • Both penalties accrue monthly, so filing two months late costs more than filing one month late.
  • If you file late but owe no tax, you owe no penalty, but you forfeit any refund after three years.
  • The IRS may waive penalties if you have reasonable cause — illness, death in the family, or a mistake by a tax professional can may have access to.

How the failure-to-file penalty works

The failure-to-file penalty is 5 percent of your unpaid tax for each full or partial month your return is late. It maxes out at 25 percent of what you owe. So if you owe $2,000 and file five months late, the penalty is $500 (25 percent of $2,000). If you file two months late on the same debt, the penalty is $200 (10 percent).

This penalty applies only if you actually owe tax. If you are due a refund, the IRS does not charge a failure-to-file penalty for late filing. However, you still lose money: the IRS keeps refunds that are not claimed within three years from the filing deadline. If your return was due April 15, 2021, and you file it in 2025, you forfeit the refund.

The penalty clock starts the day after the deadline. If April 15 falls on a weekend or holiday, the deadline moves to the next business day. If you requested an automatic six-month extension, your new deadline is October 15, and penalties begin on October 16 if you have not filed by then.

How the failure-to-pay penalty works

The failure-to-pay penalty is 0.5 percent of unpaid tax for each month the tax remains unpaid, capping at 25 percent. This penalty applies whether you file on time or late. If you file on time but do not pay, you owe this penalty. If you file late and owe tax, you owe both penalties at the same time.

The failure-to-pay penalty is smaller than the failure-to-file penalty, but it keeps growing as long as the debt sits unpaid. If you owe $2,000 and do not pay for six months, the penalty is $60 (0.5 percent × 6 months). If the debt goes unpaid for two years, the penalty reaches $240 (0.5 percent × 24 months, capped at 25 percent of the original debt).

Interest also accrues on unpaid tax. The IRS charges interest at a rate set quarterly — currently around 8 percent per year, though this changes. Interest compounds daily and is separate from penalties. So a $2,000 debt unpaid for one year costs roughly $160 in interest plus penalties.

When both penalties apply at once

If you file late and owe tax, both penalties accrue simultaneously. The failure-to-file penalty is calculated on the unpaid tax, and the failure-to-pay penalty is also calculated on the unpaid tax. They do not compound off each other — they are separate calculations on the same base amount.

Example: You owe $3,000 in tax and file three months late without paying. The failure-to-file penalty is 15 percent of $3,000 = $450. The failure-to-pay penalty is 1.5 percent of $3,000 = $45. Your total penalty is $495, plus interest on the original $3,000. If you had filed on time but not paid, you would owe only the $45 failure-to-pay penalty (for three months) plus interest.

This is why filing on time, even if you cannot pay, saves money. You avoid the steeper failure-to-file penalty entirely.

Requesting an extension does not stop penalties if you miss the new deadline

Filing an automatic six-month extension (Form 4868) moves your deadline from April 15 to October 15. This gives you more time to file without penalty. However, the extension does not extend your payment deadline — tax is still due April 15, even if you file in October.

If you file in October but did not pay by April 15, you owe failure-to-pay penalties for the six months between April 15 and October 15. The failure-to-file penalty does not apply because you filed by the extended deadline, but you still owe the payment penalty and interest.

An extension is useful if you need time to gather documents or wait for forms from employers or financial institutions. It is not useful if you know you will owe money and cannot pay by April 15 — in that case, paying what you can by April 15 and filing an extension to finish the return later is the better move.

How to request penalty relief from the IRS

The IRS may waive penalties if you show reasonable cause — a legitimate reason you could not file or pay on time. Common reasons include serious illness or injury, death of a family member, unavoidable absence, or reliance on incorrect advice from a tax professional. Mistakes in your own record-keeping or lack of funds do not usually may have access to.

To request relief, file your return and pay what you owe, then submit Form 843 (Claim for Refund and Request for Abatement) to the IRS address listed in the instructions. Include a written explanation of your reason and supporting documents — a hospital discharge summary, death certificate, or written statement from the tax professional who gave you bad advice. The IRS reviews these requests and responds in writing within several months.

You can also request relief by phone if you have already filed and the IRS has assessed the penalty. Call the number on your notice and explain your situation. The IRS representative can sometimes abate penalties on the spot if your reason is clear and your tax history is otherwise clean.

What happens if you ignore the penalty

If you do not pay the penalty, the IRS adds it to your tax debt and continues charging interest on the combined amount. The debt can be referred to a collection agency, and the IRS can place a lien on your property, garnish your wages, or offset future refunds. If the debt is large enough and remains unpaid for years, criminal prosecution is possible, though this is rare and usually reserved for deliberate tax evasion rather than late filing.

The sooner you address the debt, the less interest accrues. If you cannot pay in full, you can request an installment agreement (a payment plan) or an offer in compromise (settling for less than you owe if you truly cannot pay). Both require filing your return first.

Frequently Asked Questions

Do I owe a penalty if I file late but do not owe any tax?

No penalty applies if you owe no tax. However, if you are due a refund, you should file within three years of the original deadline to claim it. After three years, the IRS keeps the refund.

What if I filed an extension but still missed the October 15 deadline?

You owe the failure-to-pay penalty for the time between April 15 and October 15, but not the failure-to-file penalty because you filed by the extended deadline. File as soon as possible to stop the clock on the payment penalty.

Can the IRS remove penalties after I pay them?

Yes, if you can show reasonable cause. File Form 843 with an explanation and supporting documents. The IRS reviews these requests and may refund penalties if your reason is legitimate and your tax history is otherwise clean.

Does an installment agreement stop penalties and interest from accruing?

No. Penalties and interest continue to accrue on the unpaid balance while you make payments. An installment agreement only lets you pay over time instead of in one lump sum.