If you’re staring at a tax return you haven’t filed yet, you’re not alone, and the situation is more fixable than it feels. The extended deadline for 2025 federal returns is October 15, 2026, less than a month away. That makes now a good time to understand how IRS late filing penalties work, what they cost, and how to limit the damage.

At TJ Marshall Tax & Accounting in Marietta, GA, we help individuals and small businesses with late returns, IRS notices, and penalty relief requests. This guide explains what the IRS charges, how the numbers add up, and what you can do about them.

Quick Answer: What Is the IRS Penalty for Filing Late?

The IRS charges a failure-to-file penalty of 5% of your unpaid tax for each month (or part of a month) your return is late, up to 25%. A separate failure-to-pay penalty adds 0.5% per month. If your return is more than 60 days late, a minimum penalty applies: the lesser of $525 or 100% of the tax you owe for returns required to be filed in 2026. Filing on time, or filing a valid extension, is the simplest way to avoid all of this.

How Does the Failure-to-File Penalty Work?

This penalty applies when you don’t file by the due date, including any extension you properly requested. It equals 5% of the tax you still owe for every month or partial month the return is late. It maxes out at 25%, which takes five months to reach.

Two details catch people off guard:

• It’s based on unpaid tax, not your whole tax bill. If withholding and payments already covered what you owe, there’s usually nothing for the percentage to apply to.
• A partial month counts as a full month. Filing one day late triggers a full month’s penalty, just like filing 29 days late.

How Does the Failure-to-Pay Penalty Work?

The failure-to-pay penalty is 0.5% of your unpaid tax per month or partial month, also capped at 25%. It starts from the original due date, and an extension to file does not extend the time to pay.

When both penalties apply in the same month, the IRS reduces the filing penalty to 4.5%, so the combined charge is 5% per month. After five months the filing penalty stops growing, but the payment penalty keeps running. Together, the two can reach 47.5% of your unpaid tax.

Penalty	Rate	Maximum
Failure to file	5% per month (4.5% when both apply)	25%
Failure to pay	0.5% per month	25%
Minimum (return over 60 days late)	Lesser of $525 or 100% of tax owed	Applies to returns due in 2026
Interest	Federal short-term rate + 3%, compounded daily	No cap

A Real-World Example

Say you owe $5,000 and file three months late without paying:

• Failure-to-file: 4.5% × 3 months = 13.5% = $675
• Failure-to-pay: 0.5% × 3 months = 1.5% = $75
• Total penalties: $750, plus interest

If you had filed on time and only paid late, the penalty would be about $75 plus interest. The debt is the same, but late filing costs roughly ten times more. That’s why the standard advice is to file on time even if you can’t pay in full.

What Is the Minimum Penalty for Returns Over 60 Days Late?

Once a return is more than 60 days late, the IRS applies a minimum penalty: the lesser of $525 or 100% of the tax owed, for returns required to be filed in 2026. The $525 figure is not automatically added to every late return, because the “lesser of” rule still applies.

The minimum hurts most on small balances. If you owe $300 and file 61 days late, the penalty can equal the entire $300. Filing within 60 days of the deadline avoids this rule.

How Does IRS Interest Work on Late Taxes?

Interest is separate from penalties. It applies to unpaid tax and generally to penalties too, and it compounds daily from the original due date, even if you had an extension to file. For individuals, the rate is the federal short-term rate plus 3 percentage points. It has been 7% in the third quarter of 2026.

The IRS resets the rate every quarter, so check the IRS quarterly interest rates page for the current number. Unlike some penalties, interest doesn’t cap out, so every month you wait adds to the total.

What About Georgia State Penalties?

Filing late with the IRS is only half the picture. The Georgia Department of Revenue has its own late filing and late payment penalties. Georgia’s rules are similar in structure to the federal ones, with a monthly filing penalty and a smaller monthly payment penalty. The Department’s published guidance says the combined total of the two cannot exceed 25% of the tax due. Georgia also charges interest on unpaid balances.

Georgia generally honors a valid federal extension of time to file, but like the IRS, it does not extend the time to pay. Review the Georgia DOR penalty and interest page for current rates, or ask us to check your situation.

Do You Owe a Penalty If You’re Getting a Refund?

Usually not. The failure-to-file penalty is calculated on unpaid tax, so if you’re owed a refund, there’s typically no balance to penalize. Still, don’t sit on it. You generally have three years from the original due date to claim a refund. For 2025 returns, that means April 15, 2029. After that, the refund is forfeited.

8 Ways to Avoid IRS Late Filing Penalties

1. File on time, even if you can’t pay. The filing penalty is ten times the payment penalty, so a return with a balance is better than no return.
2. Request an extension before the original deadline. Form 4868 gives you until October 15 to file, but not to pay. For 2026 returns, the original deadline is April 15, 2027. Read our guide on how to file a tax extension.
3. Pay what you can, as early as you can. Every dollar paid stops penalties and interest from building on that dollar.
4. Set up a payment plan. If you filed on time, an approved installment agreement cuts the failure-to-pay rate from 0.5% to 0.25% per month. The IRS online payment agreement page explains the options.
5. Keep records organized all year. Late paperwork, like missing 1099s, receipts, or K-1s, is one of the most common reasons people file late. A simple folder or bookkeeping system makes a big difference.
6. Make estimated payments if you’re self-employed. Freelancers, landlords, and small business owners often have income without withholding. The final 2026 estimated payment is due January 15, 2027.
7. Open and answer IRS mail promptly. Notices come with deadlines, and ignoring them removes options.
8. Get professional help early. A tax professional can prepare your return, estimate what you owe, and help you plan payment before penalties snowball.

I Already Filed Late. Can I Get Penalties Removed?

Sometimes, yes. The IRS offers two main routes, and neither is automatic or guaranteed.

First-time penalty abatement. If you have a clean compliance history for the prior three years, you may qualify for relief from failure-to-file and failure-to-pay penalties. Generally, you must have filed all required returns (or valid extensions) and paid, or arranged to pay, any tax due. Learn more on the IRS page for penalty relief due to first-time abate or reasonable cause.

Reasonable cause. If circumstances beyond your control caused the delay, such as a serious illness, a death in the family, a natural disaster, or an inability to get records, you can ask the IRS to waive penalties. You’ll need to explain what happened and show that you acted responsibly once you could.

Requests are typically made by calling the number on your IRS notice or responding in writing. Documentation matters. A well-organized request with dates, records, and a clear timeline gives you the best chance.

What If You Haven’t Filed in Several Years?

You have options, and the situation usually gets worse with delay, not better. If you don’t file, the IRS can file a substitute return on your behalf using the income information it already has, such as W-2s and 1099s. That return won’t include the deductions or credits you may deserve, so you could end up owing more than you should. Filing your own return, even years late, is almost always the better path. A professional can help you gather missing records and prioritize the years that matter most.

Late Filing Penalties for Business Owners

The stakes can be higher for businesses. Partnerships and S corporations face their own late-filing penalties, which are typically calculated per owner, per month, and they can add up quickly even when the business owes no tax. Small business owners in Marietta and across Cobb County also juggle payroll filings, sales tax, and state requirements. Missing one deadline often creates a chain reaction. Regular bookkeeping and a filing calendar are the best defenses.

Why Work With a Local Marietta Tax Professional?

Penalty rules look simple on paper, but every situation has wrinkles: a missing form, an old balance, a state notice that arrives after a federal one. Working with a local team means you can ask questions, share documents, and get answers from someone who understands both federal rules and Georgia requirements.

At TJ Marshall Tax & Accounting, we can help you:

• Prepare and file current or past-due tax returns
• Respond to IRS notices and penalty letters
• Request penalty abatement where you may qualify
• Plan payments and estimated taxes for the year ahead
• Set up business bookkeeping and accounting that keeps deadlines from slipping

Frequently Asked Questions

What is the penalty for filing taxes late if I owe nothing?
Generally none, because penalties are based on unpaid tax. You should still file, since a refund can expire after three years.

Can I still file an extension for 2025?
No. An extension must be requested by the original due date. If you already filed one, your deadline is October 15, 2026.

Do IRS late filing penalties ever stop growing?
The failure-to-file penalty stops at 25%, but the failure-to-pay penalty and interest keep building until you pay in full.

Will the IRS remove penalties automatically?
Not usually. You typically need to request relief, and approval depends on your history and circumstances.

Does Georgia charge its own late filing penalties?
Yes. The Georgia Department of Revenue assesses state penalties and interest separately from the IRS.

The Bottom Line

IRS late filing penalties grow every month, but they are predictable and manageable. File as soon as possible, pay what you can, and ask about relief if you qualify. The biggest mistake is waiting because the situation feels overwhelming.

If you’re behind on a return or worried about the October 15 deadline, contact TJ Marshall Tax & Accounting in Marietta, GA to talk through your options.

This article is for general information only and isn’t tax or legal advice. Penalty amounts, interest rates, and deadlines change, so confirm current figures with the IRS, the Georgia Department of Revenue, or a qualified tax professional.