The Internal Revenue Service (IRS) treats each late filer individually and calculates penalties and interest on a case-by-case basis.
Once the IRS receives or accepts your tax return, they will calculate the IRS penalty (plus possible interest) and then send you a separate bill.
For this reason, it is not possible to calculate late-filing penalties or interest. You can get a rough idea about the calculation of late-filing penalties or interest below (courtesy of IRS Tax Topic 653).
IRS Penalties
- There is no penalty if you are getting a tax refund, provided you file within 3 years of the April 15 deadline (or October 15 deadline if you filed an extension).
- After 3 years, unclaimed tax refunds are forfeited and become the property of the U.S. Treasury.
There is no penalty if you filed an extension and paid any taxes owed by April 15, as long as you file your return by the October 15 deadline. - A late filing penalty applies if you owe taxes and did not file your tax return or extension by April 15.
This penalty also applies if you owe taxes, filed an extension, but did not file your return by October 15.
The late filing penalty is 5% of the additional taxes owed amount for every month (or fraction thereof) your return is late, up to a maximum of 25%. - If you file more than 60 days after the due date, the minimum penalty is $135 or 100% of your unpaid tax, whichever is smaller.
Tip: The late filing penalty can be 10 times higher than the late payment penalty. If you cannot pay your tax bill and did not file an extension, at least file your return as soon as possible! You can always amend it later.
A late payment penalty applies if you did not pay additional taxes owed by April 15, whether you filed an extension or not.
The late payment penalty is 0.5% (1/2 of 1 percent) of the additional tax owed amount for every month (or fraction thereof) the owed tax remains unpaid, up to a maximum of 25%.
For any month(s) in which both the late-payment and late-filing penalties apply, the 0.5% late-payment penalty is waived.
Example: You did not file your return or an extension by April 15, and you still owe the IRS an additional $1,000 in taxes.
Best-case scenario: You file your return on April 29 (2 weeks late) and submit your payment for $1,000. You would likely owe an additional $50 for the late-filing penalty ($1,000 x .05 = $50).
Had you filed an extension by April 15, your late-payment penalty would be only $5 instead of $50.
Worst-case scenario: You finally file your 2014 return in April of 2020, 5 years late, and submit your payment for $1,000. You would likely owe an additional $250 for filing late ($1,000 x the maximum .25).
If you have any questions, please contact JV LAW GROUP at 714-752-3270 or send us an email info@jvlawgroup.com. We are here to help.
