Missing a tax deadline is stressful, but it's a common problem, and it's fixable. What matters most is what you do next. The IRS charges separate penalties for filing late and for paying late, and the filing penalty is by far the bigger of the two.
Here's how the penalties work, what relief is available and the steps to take now.
Two different penalties
Failure to file
If you owe tax and don't file on time (including any extension), the penalty is 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25%.
There's also a minimum penalty if your return is more than 60 days late. For returns required to be filed in 2026 (generally your 2025 return), the minimum is the smaller of $525 or 100% of the tax owed. For returns required to be filed in 2027 (generally your 2026 return), it's the smaller of $535 or 100% of the tax owed.
Failure to pay
If you don't pay what you owe by the due date, the penalty is 0.5% of the unpaid tax for each month or part of a month, also up to 25%. If both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay amount, so the combined charge is 5% for that month.
Two situations change the rate:
- If you filed on time and set up an approved payment plan, the failure-to-pay penalty drops to 0.25% per month while the plan is in effect.
- If you don't pay within 10 days of receiving an IRS notice of intent to levy, it rises to 1% per month.
An example
Say you owe $10,000 and file and pay three months late. The combined penalties are about 5% a month, or roughly $1,500, before interest. If you had filed on time but still paid three months late, the failure-to-pay penalty would be about $150. Filing on time, even without paying, is the single most effective way to limit the damage.
Interest adds up too
On top of penalties, the IRS charges interest on unpaid tax. The rate for individuals is the federal short-term rate plus 3 percentage points, it's set each quarter and it compounds daily. For the fourth quarter of 2026 (October through December), the underpayment rate for individuals is 7% a year.
Interest also applies to penalties, and it keeps running until the balance is paid in full, including while you're on a payment plan.
If you're owed a refund
If you're due a refund, there's no failure-to-file penalty for filing late. But don't wait too long. You generally have to claim a refund within 3 years of the return's due date. After that, the money is usually lost for good.
The exact rule is that a claim must be filed by the later of 3 years from when you filed the return or 2 years from when you paid the tax. A return filed early is treated as filed on the due date.
Extensions: more time to file, not to pay
If you know you'll miss the April deadline, you can get an automatic extension until October 15 by filing Form 4868, using IRS Free File, or making an electronic payment and marking it as an extension payment.
An extension gives you more time to file, but not more time to pay. Tax owed is still due by the April deadline, and interest and the failure-to-pay penalty apply to anything paid later. U.S. citizens and residents living abroad on the due date may get an automatic 2-month extension, and people in federally declared disaster areas may get extra time.
Getting penalties removed
First-time abatement
If you have a clean history, you may qualify for first-time abatement of failure-to-file, failure-to-pay or failure-to-deposit penalties. Generally, you must have:
- Filed the same type of return on time for the prior three years, and
- Had no penalties in those three years (an estimated tax penalty doesn't count against you), or had any penalty removed for reasonable cause.
You can request it by calling the number on your IRS notice or by sending a written statement or Form 843. You don't need to name the relief or send documents; the IRS will check your account.
Reasonable cause
If you don't qualify for first-time abatement, you may still get relief if you can show reasonable cause, meaning you acted in good faith and something beyond your control kept you from filing or paying on time. Examples the IRS lists include fires or natural disasters, a death or serious illness in the immediate family, and being unable to get records. Not having enough money to pay, or simply forgetting, generally doesn't qualify. If a penalty is removed, the IRS also reduces or removes the interest charged on that penalty.
If you can't pay in full
The IRS offers payment plans:
- Short-term plan: up to 180 days to pay if you owe less than $100,000 in combined tax, penalties and interest. There's no setup fee.
- Long-term plan (installment agreement): monthly payments if you owe $50,000 or less and have filed all required returns. Applying online costs $29 with direct debit or $69 with other payment methods. Applying by phone or mail costs more. Low-income taxpayers may qualify for reduced or waived fees.
Pay as much as you can when you file. Every dollar paid now stops penalties and interest from growing on it.
Your next steps
- Gather your W-2s, 1099s and other records. You can request wage and income transcripts from your IRS online account if documents are missing.
- File the return as soon as possible, even if you can't pay.
- Pay what you can, and set up a payment plan for the rest.
- Once you've filed, ask about first-time abatement or reasonable cause relief.
- Read every IRS letter and respond by the date it gives. Our guide on what to do when you get an IRS letter can help.
When it's worth getting help
A single late return with a small balance is often easy to fix on your own. Professional help is worth considering if you have several years unfiled, owe more than you can pay, have received a notice of intent to levy, or want to request penalty relief. Our audit and IRS representation team can deal with the IRS for you, help you file past-due returns and request relief. If you need to file a past-due personal return, see our personal tax preparation service, or book an appointment.
This article is general information, not advice for your specific situation.
Sources
- IRS: Failure to file penalty
- IRS: Failure to pay penalty
- IRS Revenue Procedure 2025-32 (minimum penalty, returns filed in 2027)
- IRS Revenue Procedure 2024-40 (minimum penalty, returns filed in 2026)
- IRS: Interest rates for the fourth quarter of 2026
- IRS: If you missed the deadline to file
- IRS: Time you can claim a credit or refund
- IRS: Get an extension to file your tax return
- IRS: Penalty relief for reasonable cause
- IRS: First-time abate penalty relief
- IRS: Payment plans
General information, not tax advice. Tax rules change and depend on your situation. Figures are for tax year 2026 unless noted; confirm current amounts at IRS.gov or talk to a Stellar Tax professional before acting.