It’s April 15, and that means those who haven’t yet filed their taxes or paid their amounts due have got to hurry up and get them filed and mail or submit payments. The IRS has a variety of penalties in place for those who either fail to file or fail to pay.
The failure-to-file penalty is calculated based on the time from the deadline of your tax return – including extensions – to the date you actually filed your tax return. The penalty is five percent for each month the tax return is late, up to a total maximum penalty of 25 percent.
The failure-to-pay penalty is calculated based on the amount of tax you owe. The penalty is 0.5 percent for each month the tax is not paid in full. There is no maximum limit to the failure-to-pay penalty. The penalty is calculated from the original payment deadline until the balance due is paid in full.
Finally, interest is calculated based on how much tax you owe. Interest rates change every three months. Currently, the IRS interest rate for underpayment of tax is three percent per year. The interest is calculated for each day your balance due is not paid in full.
