If you haven’t filed yet and expect to owe, submit an extension ASAP to dodge the hefty late filing penalty. (Request in your client portal.) After your balance shows up in your IRS online account (which could take months—because of course it does), set up a payment plan to curb extra penalties and interest. Fair? Not really. Real? Absolutely. Scroll down for examples of how quickly interest can stack up—because while the IRS won’t ghost you, they will pile on interest faster than a title loan shark in a late-night infomercial.
Interest on Unpaid Taxes Adds Up—Daily, Like a Gym Membership You Forgot to Cancel
Owe taxes? Interest starts racking up from April 15, 2025, and keeps going until you pay—compounded daily. The rate? It’s the federal short-term rate plus 3%, and it changes quarterly. There’s no extension to pay, only to file—so the clock’s ticking.
Penalties for Unpaid Taxes, the IRS’s Not-So-Fun Add-Ons
There are two main types of penalties, the failure to pay penalty and the failure to file penalty. Miss both? You’ll get hit with both. It’s like a late fee sandwich—with interest sauce.
- Failure to Pay Penalty: 0.5% per month on unpaid taxes, maxing out at 25%.
- Failure to File Penalty: Much steeper at 5% per month, also up to 25%.
Just How Painful are Interest and Penalties?
- $1,000 Unpaid: Interest for 31 days is approx. $3.39. The failure to pay penalty is $5 per month, and if you haven’t filed, the failure to file penalty is $50 per month.
- $5,000 Unpaid: Interest for 31 days is approx. $16.95. The failure to pay penalty is $25 per month, and the failure to file penalty is $250 per month.
- $10,000 Unpaid: Interest for 31 days is approx. $33.90. The failure to pay penalty is $50 per month, and the failure to file penalty is $500 per month.
- $20,000 Unpaid: Interest for 31 days is approx. $67.80. The failure to pay penalty is $100 per month, and the failure to file penalty is $1,000 per month.