TooziWhat does filing or paying late actually cost?
Usually less than people fear, and almost always less than not filing. Enter the balance you owe and how late you are; the calculator separates the two penalties from the interest so you can see which one to stop first.
Failure to file: 5%/month capped at 25% (4.5% in months the pay penalty also applies, with a minimum once 60 days late). Failure to pay: 0.5%/month capped at 25%. Interest at the current IRS rate (7%), compounded daily, shown on the tax only. A payment plan lowers the monthly pay penalty.
Three separate charges
Failure to file is the big one: 5% of the unpaid tax for each month or part of a month the return is late, up to 25%. Failure to pay is 0.5% per month, also capped at 25%. When both apply in the same month the filing penalty is reduced to 4.5% so the combined monthly hit is 5%.
Interest runs on top at the IRS rate, which resets each quarter and compounds daily. It applies to the tax and to the penalties.
What to do if you cannot pay
File anyway. Filing on time with no payment turns a 5%-per-month penalty into a 0.5%-per-month one. Then set up a payment plan: the IRS approves most installment agreements under $50,000 online, and the failure-to-pay rate drops to 0.25% per month while the plan is active.
If this is your first time being late and you have been compliant for three years, ask for first-time penalty abatement. It removes the penalties, though not the interest.
Extensions buy time to file, not to pay
An extension moves the filing deadline to October 15 and removes the failure-to-file penalty, but the balance was still due in April. Pay what you can with the extension and the failure-to-pay penalty and interest run only on the remainder.
Stop estimating. Have Toozi keep the running number.
Text your income and expenses as they happen. Toozi keeps the books, sets aside the right amount from each payment, texts you before every due date, and e-files the return.
- 14 days free
- No card to start
- Cancel by text
- IRS e-file authorized
Questions
Is there a minimum penalty?
If the return is more than 60 days late, the failure-to-file penalty is at least a fixed minimum (adjusted yearly) or 100% of the unpaid tax, whichever is smaller. The calculator applies it.
Does the penalty apply if I am owed a refund?
No. Both penalties are a percentage of unpaid tax, so with a refund due there is nothing to penalize. You still have three years to file and claim it.
Can Toozi file my late return?
Yes. Toozi is an IRS Authorized e-file Provider and files prior-year and extension returns by text. Filing stops the biggest penalty the day it goes in.
Tax is a doozy.
Toozi isn't.
Text (844) 482-4881 and your first expense is logged in 10 seconds.