Missing the IRS tax deadline—whether by failing to file your return or failing to pay what you owe—can result in costly penalties and interest. With tax season deadlines in April and extensions ending in October, understanding the differences between late filing and late payment penalties is essential for avoiding unnecessary charges in 2025 and 2026.
📅 Key Deadlines for 2025 Tax Season
- April 15, 2025: Regular tax filing and payment deadline for 2024 returns
- October 15, 2025: Extended filing deadline (if you requested an extension using Form 4868)
Important: An extension to file is not an extension to pay. Payment is still due by April 15, even if you file in October.
❗ What Are the Two Main IRS Penalties?
- Failure-to-File Penalty (Late Filing Penalty)
- Failure-to-Pay Penalty (Late Payment Penalty)
📉 Penalty for Late Filing (Failure-to-File)
The late filing penalty is much steeper than the late payment penalty.
- 5% of the unpaid taxes for each month (or part of a month) your return is late
- Maximum penalty: 25% of the unpaid tax
- If your return is more than 60 days late, the minimum penalty is the lesser of:
- $510 (2025 adjusted amount), or
- 100% of the unpaid tax
Example: If you owe $10,000 and file 3 months late, the penalty is 3 × 5% = 15% of $10,000 = $1,500.
📉 Penalty for Late Payment (Failure-to-Pay)
- 0.5% of the unpaid taxes per month, up to a maximum of 25%
- Begins the day after the due date (April 16, 2025)
- If both penalties apply in the same month, the late filing penalty is reduced to 4.5%, so total combined is 5%
Example: If you owe $5,000 and pay 4 months late, you’ll owe 4 × 0.5% = 2% × $5,000 = $100 in late payment penalties.
💸 Interest Charges
In addition to penalties, the IRS charges interest on unpaid taxes and penalties. The interest rate is the federal short-term rate plus 3%, and it compounds daily. For Q1 2025, the rate is approximately 8%.
🧾 How to Minimize IRS Penalties
- File your return on time—even if you can’t pay in full
- Pay as much as you can by April 15 to reduce interest and penalties
- Use IRS Direct Pay or IRS payment options to pay securely
- Request a payment plan (Installment Agreement) to avoid collection action
- Apply for penalty abatement if you have reasonable cause (see below)
📝 First-Time Penalty Abatement (FTA)
You may qualify for a one-time forgiveness of penalties if:
- You filed all required returns (or filed an extension)
- You have no prior penalties in the past 3 years
- You’ve paid or made arrangements to pay the tax owed
To request, call the IRS or write a letter explaining your situation.
📨 What If You Can’t Pay at All?
The worst thing to do is ignore the problem. Instead:
- File on time to avoid the 5% monthly late filing penalty
- Pay as much as you can upfront
- Set up an Installment Agreement using IRS Online Payment Agreement Tool
- Consider requesting Currently Not Collectible (CNC) status if experiencing hardship
🔍 People Also Ask (FAQs)
Q: What’s worse—filing late or paying late?
A: Filing late is worse. The failure-to-file penalty is 10 times higher than the failure-to-pay penalty (5% vs. 0.5% monthly).
Q: Can I still file after the deadline?
A: Yes. File as soon as possible. Late is better than never, and it reduces the accumulating penalties.
Q: Will I go to jail for not filing taxes?
A: Not usually. Most cases result in penalties and interest. However, deliberate fraud or multi-year non-filing could lead to criminal prosecution.
Q: Can I get a refund if I file late?
A: Yes, but only if you file within 3 years of the original due date. After that, the refund is forfeited.
📘 Final Thoughts
The IRS imposes separate penalties for filing late and paying late—and these charges compound quickly. To avoid financial stress, file your return on time, even if you can’t pay everything. Consider penalty abatement or payment plans to manage your obligations for the 2025 and 2026 tax years.
Pro Tip: If you’re facing penalties, contact a tax professional to review your options for reducing or eliminating them through first-time relief or reasonable cause claims.
