Tax Extension Penalty Calculator

Form 4868 buys you extra time to file. It buys you no extra time at all to pay. Miss the original April deadline with a balance outstanding and both a failure-to-pay penalty and interest start running, extension or no extension.

Formulas:

Failure-to-Pay Penalty: Penalty = Unpaid Tax × 0.5% × Number of Months Late (Maximum penalty: 25% of unpaid tax)

IRS Interest: Interest = Unpaid Tax × (Federal Funds Rate + 3%) ÷ 365 × Days Late (Interest compounds daily; the rate adjusts quarterly)

Failure-to-File Penalty, which is ten times worse: Penalty = Unpaid Tax × 5% × Number of Months Late (max 25%)

What each variable means:

• Unpaid Tax is what you owe after withholding and estimated payments.
• Months Late counts each partial month as a whole one. Being one day late costs a full month of penalty.
• The interest rate is the federal short-term rate plus 3 percentage points, reset every quarter. It ran at 8% for most of 2024 and around 7% through 2025. Because it moves, the box above lets you enter the current one rather than trusting a figure baked into this page.

The minimum penalty that catches small balances. If a return is more than 60 days late, the failure-to-file penalty is at least the lesser of $525 or 100% of the tax due. Owe $400 and file eight months late and the penalty is the full $400, not the $100 the 5%-a-month arithmetic suggests.

Worked example: You owe $3,000, filed an extension, and pay three months late at a 7% interest rate.

• Failure to pay: $3,000 × 0.5% × 3 = $45
• Interest: $3,000 × 7% × (3 ÷ 12) = $52.50
• Total extra: $97.50

Now the same $3,000 with no extension filed at all:

• Failure to file on the percentages: 5% × 3 months = 15% of $3,000 = $450, less the $45 of failure-to-pay already counted, so $405
• But three months is past 60 days, so the minimum applies: the lesser of $525 or the whole tax. Here that is $525, more than the percentage arithmetic gives
• Plus the same $45 and $52.50
• Total extra: $622.50

More than six times the cost, for the sake of a form that takes ten minutes and is never refused. Note how the minimum bit here: on any balance under about $3,500, being three months late costs the same flat $525 whether you owe $600 or $3,400.

File the extension even when you cannot pay a cent. Form 4868 is free, needs no explanation, and is never refused. It moves the filing deadline to 15 October and kills the 5%-a-month penalty outright. What it does not move is the payment deadline, so interest and the 0.5% keep running from April either way.

Ask for the penalty to be removed. First-Time Abatement wipes both penalties if you have filed and paid on time for the previous three years, and it is granted on a phone call. Most people who qualify never ask. It does not touch the interest, which the IRS cannot waive by law.