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By Aliss Higham
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Missing the federal tax deadline could lead to mounting penalties and interest for some filers, particularly those who owe money to the IRS.
While not everyone faces a financial hit, understanding how penalties work and when they are used may help taxpayers avoid unnecessary costs.
Filing Taxes Late
For the 2026 tax year, the filing deadline is April 15. Those who submit their return after that date without an approved extension, and who owe taxes, may face penalties.
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The IRS applies a late-filing penalty of 5 percent of the unpaid tax for each month, or part of a month, that a return is overdue. This charge is capped at 25 percent of the total owed. According to the agency, "If you are late paying your taxes, the IRS levies five percent of the unpaid taxes for each month or part of a month that a tax return is late. The penalty cannot exceed 25 percent of your unpaid taxes."
There is also a minimum penalty for significantly delayed filings. If a return is more than 60 days late, filers in 2026 may owe at least $525, or the full amount of tax owed, whichever is less.
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Paying Taxes Late
In addition to filing penalties, the IRS imposes a separate charge for failing to pay taxes on time. This late-payment penalty is typically 0.5 percent per month on any unpaid balance.
The rate can increase under certain circumstances. If a taxpayer does not settle their debt within 10 days of receiving a notice of intent to levy property, the penalty may rise to 1 percent per month. Like the filing penalty, this charge is also capped at 25 percent of the unpaid amount.
When both penalties apply in the same month, the IRS adjusts the calculation. The late-filing penalty is reduced by the late-payment penalty, meaning taxpayers would effectively pay 4.5 percent for filing late and 0.5 percent for paying late during that period.
Interest is another factor that can increase the total owed. Interest typically begins accruing immediately after the filing deadline and continues until the balance is paid in full. It can also apply to penalties themselves, compounding the overall cost over time.
What To Do If You Can't File Or Pay
Taxpayers who cannot meet the April deadline have options to limit penalties. Filing for an extension can provide more time to submit a return, though it does not extend the deadline to pay any taxes owed.
The IRS advises that paying as much as possible upfront can help reduce additional charges. Setting up a payment plan may also limit future penalties.
In some cases, penalties may be reduced or removed. The IRS says it may offer relief if a taxpayer "acted in good faith and can show reasonable cause for why you weren't able to meet your tax obligations." However, interest is generally not waived unless the underlying penalty is also reduced.
Taxpayers who believe a penalty has been applied incorrectly can challenge it by contacting the IRS or submitting a written explanation along with supporting documents.
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