IRS Penalty Calculator

The failure-to-file penalty is 5% of the tax still unpaid on the due date for every month or part of a month the return is late, up to five months. The failure-to-pay penalty is 0.5% of the unpaid tax for each month or part of a month, up to 25%. In any month when both apply, the IRS reduces the filing penalty by the payment penalty, so you're charged 5% total rather than 5.5%.

That overlap rule is why the maximum combined penalty is 47.5%: 22.5% from filing late (five months at 4.5%) plus up to 25% from paying late over 50 months.

The filing penalty grows ten times faster than the payment penalty. A taxpayer who owes $10,000 and files on time but pays nothing for a year has about $600 in payment penalties. The same person who doesn't file for a year has about $2,850 in combined penalties. If you can't pay, file anyway and then set up an IRS payment plan — doing so also cuts the ongoing payment penalty to 0.25% a month.

If you haven't filed for several years, read haven't filed taxes in years for how the IRS usually handles catch-up filings.

Penalties are the most negotiable part of most tax balances. First-time penalty abatement is an administrative waiver for one tax period when you have no penalties in the prior 3 years and are current on filing. Reasonable cause relief applies when something outside your control — illness, a disaster, being unable to get records — caused the problem. Interest on abated penalties is removed too. Official details are on the IRS penalty relief page.