What's the penalty for filing taxes late?

Most of the fear around unfiled years is about penalties, and most of it comes from not knowing how they work. The IRS publishes the rules, and they are simpler than they sound. This guide explains them in plain English, using only what the IRS's own pages say. Figures were checked against IRS.gov on November 10, 2026.

This is general information, not tax advice. How these rules apply to you depends on your years and numbers, which is what a licensed tax pro works out.

How much is the penalty for filing late?

The IRS's failure to file penalty(IRS.gov), opens in a new tab is 5% of the tax due for each month or part of a month the return is late. "Tax due" means the tax you owe minus anything you paid on time and any credits. The penalty stops growing at 25% of that amount.

So a return that is 2 months and 1 day late counts as 3 months. After 5 months, the filing penalty has reached its cap.

How much is the penalty for paying late?

The failure to pay penalty(IRS.gov), opens in a new tab is 0.5% of the unpaid tax for each month or part of a month it stays unpaid, and it also stops at 25%. Two details from the same IRS page:

• If you filed on time as an individual and have an approved payment plan, it drops to 0.25% a month while the plan runs.
• If you don't pay within 10 days of an IRS notice of intent to levy, it rises to 1% a month.

What happens when both apply?

If a return is late and the tax is unpaid, both penalties can apply in the same month. The IRS says the filing penalty is then reduced by the paying penalty, so together they come to 5% a month (4.5% for filing plus 0.5% for paying). After 5 months the filing penalty is capped, but the paying penalty keeps going until the tax is paid or it reaches its own cap.

That is why the IRS's page on filing past due tax returns(IRS.gov), opens in a new tab tells people to file their past due return and pay now to limit interest and late payment penalties. Filing stops the larger penalty growing, even if you can't pay yet.

Is there a minimum penalty?

Yes, once a return is more than 60 days late. The minimum is a set dollar amount or 100% of the unpaid tax, whichever is less. The amount depends on when the return was originally due. From the table on the IRS's failure to file penalty(IRS.gov), opens in a new tab page:

• Returns due after December 31, 2025: $525
• Returns due in 2025: $510
• Returns due in 2024: $485
• Returns due in 2023: $450
• Returns due from 2020 to 2022: $435

On a small balance, this minimum can be larger than the percentage would be. On a balance below the minimum, the penalty can equal the whole unpaid amount.

A worked example (estimate)

This is a simplified illustration, not a calculation of anyone's real penalty. It leaves out interest and any payments or credits.

Say you owe $4,000 for a year and file 3 months late without paying:

1. Filing penalty: 4.5% a month for 3 months is 13.5% of $4,000, which is $540. That's more than the $525 minimum, so $540 applies.
2. Paying penalty: 0.5% a month for 3 months is 1.5% of $4,000, which is $60, and it keeps adding 0.5% a month until the tax is paid.
3. Total so far: about $600 in penalties, plus interest.

If you'd filed on time and only paid late, the penalty for those 3 months would have been the $60 alone. That gap is the whole case for filing first and sorting out payment second.

What if I'm owed a refund?

Both penalties are calculated from unpaid tax. Going by the IRS's own formula, a year where you owe nothing has nothing to calculate them from. That's our reading of the rules, so confirm it with a tax pro for your years.

The real risk with a refund year is time. The IRS's page about refunds(IRS.gov), opens in a new tab says you have 3 years to claim a refund, and its past due returns page says you risk losing it if you don't file.

Can the penalties be reduced or removed?

Sometimes. The IRS's penalty relief(IRS.gov), opens in a new tab page says you may qualify if you tried to comply with tax laws but couldn't because of circumstances beyond your control. It describes two main routes:

• First Time Abate. The IRS's page on administrative penalty relief(IRS.gov), opens in a new tab says this waiver applies to taxpayers with three years of timely compliance history. The same page says it is moving to a new name, Automatic Exemption from Penalty, starting summer 2026.
• Reasonable cause. The IRS's page on penalty relief for reasonable cause(IRS.gov), opens in a new tab says this is decided case by case, looking at all the facts and circumstances.

Whether either fits your situation is a question for a licensed tax pro. Nobody can promise an outcome before they've looked.

What to do now

1. List the years you think are missing, and whether you expect to owe or be owed for each.
2. If you're owed refunds, check how close each year is to the 3-year limit.
3. If you owe, remember that filing stops the 5% a month penalty from growing, even before you can pay.
4. Talk to a licensed tax pro about the order to file in, and whether penalty relief is worth asking for.

BackYears can introduce you to a vetted CPA, Enrolled Agent or tax attorney who catches people up for a flat price. We're an independent referral service. We don't prepare returns or give tax advice, and we're not the IRS. If paying is the worry, read worried you'll owe and can't pay? next.