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How much is interest and penalty on taxes owed?
There are three additional assessments the IRS can tack onto the taxes that are due-
Failure to File Penalty: The IRS charges 5% per month for each month after the due date of the tax return up to a maximum of 25%. This includes extensions. So, if you extend your individual tax return and file it in December you could face a 10% of the tax due. Naturally if you are due a tax refund there isn’t a failure to file penalty- it is only imposed if you owe.
Failure to Pay Penalty: This is computed at 0.5% per month (or 6% per year) with no limit. Extensions do not eliminate this penalty- for example, you file an extension and eventually submit your tax returns on July 15. You will owe 1.5% (3 months x 0.5%) in failure to pay penalties.
Interest: Interest rates change every quarter and are currently at 4% per year. Just like the failure to pay penalty, interest is charged from the original due date of the tax return based on the balance due. Generally the IRS has to notify you of a discrepancy or issue within 18 months of original filing date to charge interest- this is only if you face an adjustment of your tax return. If you owe taxes on your originally filed tax return, interest will be charged regardless.
If you acted reasonably and in good faith, the IRS might abate your penalties but typically not interest.