US Late Filing Penalty Calculator

The failure-to-file penalty is 5% of the unpaid tax for each month or part month the return is late, capped at 25% — so it maxes out after five months. On $20,000 of unpaid tax that is $5,000 before any reduction. Where the failure-to-pay penalty runs in the same month the failure-to-file penalty is reduced by it, giving a combined 5% per month rather than 5.5%.

For returns required to be filed in 2026, the minimum failure-to-file penalty is the lesser of $525 or 100% of the tax required to be shown on the return that remains unpaid. It matters most for small balances: someone 90 days late owing $600 faces the $525 minimum rather than the $90 the percentage calculation would produce. It cannot exceed the tax owed, so a return with no unpaid tax has no minimum penalty.

Failure to file is 5% of unpaid tax per month, capped at 25%, and is charged for filing the return late. Failure to pay is 0.5% per month, also capped at 25%, and is charged for not paying by the due date. Filing late is ten times more expensive than paying late — which is why the single most valuable thing you can do if you cannot pay is still file on time and arrange payment separately.

7% for the quarter beginning 1 July 2026, up from 6% in the previous quarter. It is set quarterly at the federal short-term rate plus three percentage points for individuals and compounds daily. Interest runs from the original due date regardless of any extension, is charged on penalties as well as tax, and — unlike penalties — is not removed by First Time Abate or reasonable cause relief in ordinary cases.

No. Both penalties are calculated as a percentage of unpaid tax, so where nothing is owed there is nothing to apply them to. But filing late still costs you: a refund is forfeited entirely if the return is not filed within three years of the due date, and for Americans abroad late filing can jeopardise elections that must be made on a timely return, including the foreign earned income exclusion.

Yes, for the period it covers. A valid Form 4868 extends the filing deadline to 15 October and no failure-to-file penalty accrues until then. What it does not do is extend the payment deadline — the failure-to-pay penalty and interest both run from 15 April on any unpaid balance. This is the single most common misunderstanding about extensions, and it is why an extension with no payment still costs money.

Yes. If your tax home and abode are outside the United States on the regular due date, you get an automatic two-month extension to 15 June with no form required — attach a statement to the return saying you qualify. Form 4868 extends that to 15 October, and Form 2350 can extend further where you need more time to meet the bona fide residence or physical presence test for the foreign earned income exclusion. Interest still runs from 15 April in every case.

First Time Abate is administrative relief that removes the failure-to-file and failure-to-pay penalties for a single tax year where you filed all required returns and had no penalties for the three prior tax years, and have paid or arranged to pay the tax due. It is granted on request rather than automatically, so it is worth asking even after a notice arrives. It does not remove interest, and it does not apply to most international information return penalties such as Form 5471 or Form 5472.

Yes, where you can show you exercised ordinary business care and prudence and were still unable to comply. Serious illness, a death in the immediate family, destruction of records, and demonstrable reliance on incorrect professional advice are the strongest grounds. Being too busy, or not having the money, generally is not. Reasonable cause requests are made in writing with specific dates and supporting evidence — a generic statement rarely succeeds.

There is no time limit where no return was filed. The three-year assessment statute of limitations only starts running when a return is filed, so an unfiled year stays open indefinitely and penalties can be assessed whenever the IRS gets to it. Filing the missing return is what starts the clock — which is the practical argument for catching up voluntarily rather than waiting to be found.

The IRS can prepare a substitute for return on your behalf using the information it holds. Substitutes for return give you no deductions beyond the standard deduction, no dependants, no foreign earned income exclusion and no foreign tax credits, so the assessed liability is typically far higher than the true one. Penalties and interest then run on that inflated figure, and collection action follows — including passport certification for seriously delinquent tax debt.

Yes. Online payment agreements are available to most individuals owing under $50,000 combined tax, penalties and interest. Entering an approved instalment agreement halves the failure-to-pay penalty from 0.5% to 0.25% per month for the months the agreement is in force, provided the return was filed on time. Interest continues at the full rate throughout, so an instalment agreement reduces the penalty drag rather than eliminating the cost of delay.

They apply in principle, but they are usually the smaller problem. Most Americans in the UK pay more UK tax than they would owe the US, so foreign tax credits often leave little or no unpaid US tax — and with no unpaid tax, both penalties compute to nothing. The real exposure sits in FBAR and information return penalties, which are fixed-dollar and not tied to tax owed. That is why the Streamlined Foreign Offshore Procedures, with their 0% penalty, are normally the right route rather than simply filing late.

It depends on whether foreign accounts and information returns are involved. For a straightforward domestic year, filing late and requesting First Time Abate is usually sufficient. Where unreported foreign accounts, pensions or funds are in the picture, filing quietly outside an IRS programme gives up the penalty protection the Streamlined Foreign Offshore Procedures provide for the same paperwork — and forfeits the chance to put a non-willfulness certification on file at a time of your choosing.