The penalty for filing taxes late with the IRS generally consists of two parts:

• Failure-to-file penalty: This is 5% of the unpaid tax for each month or part of a month your return is late, up to a maximum of 25% of the tax owed. If your return is more than 60 days late, the minimum penalty is either $510 (for 2024 tax returns) or 100% of the unpaid tax, whichever is less

• Failure-to-pay penalty: This is 0.5% of the unpaid tax for each month or part of a month the tax remains unpaid, also up to 25% of the unpaid tax. This penalty continues to accrue even after the failure-to-file penalty has maxed out

When both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty amount, resulting in a combined penalty of 5% per month (4.5% for late filing plus 0.5% for late payment)

. Additional details:

• The penalties are calculated on the tax balance due after subtracting any tax paid on time, withholding credits, estimated payments, and refundable credits

• Interest also accrues on unpaid taxes starting the day after the due date until the balance is paid in full, at a current rate of around 8% (subject to change)

• Penalties can be waived or reduced if you have a reasonable cause for filing late or qualify for first-time penalty abatement

In summary, filing late can cost you up to 25% of your unpaid taxes in failure-to-file penalties plus up to another 25% in failure-to-pay penalties, plus interest. The failure-to-file penalty is the more severe of the two and accrues faster. Filing on time or requesting an extension and paying what you owe can help avoid or minimize these penalties.