Tax Extension Penalty Calculator

When you file a tax extension (Form 4868 in the U.S.), you get extra time to file your return — but you do not get extra time to pay any taxes owed. Failing to pay by the original deadline triggers both a failure-to-pay penalty and interest charges.

Formulas:

Failure-to-Pay Penalty: Penalty = Unpaid Tax × 0.5% × Number of Months Late (Maximum penalty: 25% of unpaid tax)

IRS Interest: Interest = Unpaid Tax × (Federal Funds Rate + 3%) ÷ 365 × Days Late (Interest compounds daily; the rate adjusts quarterly)

Failure-to-File Penalty (if you don’t file at all — much worse): Penalty = Unpaid Tax × 5% × Number of Months Late (max 25%)

What each variable means:

• Unpaid Tax: the amount owed after subtracting withholding and estimated payments.
• Months Late: each partial month counts as a full month for penalty calculation.
• Federal Funds Rate: set by the IRS quarterly; in 2024 this was 8% annual for individuals, making the interest rate 8% + 3% = 11% (then divided by 365 for daily compounding).

Worked example: You owe $3,000, file an extension, but pay 3 months late.

Failure-to-Pay Penalty = $3,000 × 0.5% × 3 = $45 Interest (approx.) = $3,000 × (11% ÷ 365) × 92 days = $83.18 Total extra cost = $45 + $83.18 = $128.18

Key takeaway: File on time even if you can’t pay — the failure-to-file penalty is 10× worse than the failure-to-pay penalty. Pay as much as you can by April 15 to minimize interest.