Interest and Penalties

Interest applies to overdue tax from the original due date of the return until you pay the tax. See interest rates for recent years. 

Penalties apply to late returns, late payments, or both. The law determines calculations, and they differ by tax type.

It’s important that you get in touch with us if you’ve forgotten to file for one or more tax periods.

When penalty applies

By law, you’ll owe a penalty if you:

  • Don’t file a tax return on time (5%/month to a maximum of 25%).
  • File a return on or after the original due date and pay tax due after you file (0.5%/month to a maximum of 25%).
  • Don’t have a valid extension and don’t pay tax due by the original due date (2%/month from the original due date to the payment date).
  • Substantially understate tax due (10%).
  • Disregard rules without an intent to defraud (5%).
  • File a false or fraudulent tax return (50%).

The minimum penalty is $10.

Calculating income tax penalty

See how we calculate penalties for income tax, based on the law: pdf How Your Income Tax Penalty Is Calculated.

You can also use the Penalty and Interest Estimator to calculate what you could owe.


You might qualify for an extension to file your income tax return without a filing penalty. 

  • Extensions don’t apply to payments — you must pay in full by the original due date to avoid interest and possible penalties.
  • Even with a valid extension, you must pay any tax you owe when you file your return during the extension period, or a penalty applies.
  • The other penalties described above might also apply.

What you don’t know about a “valid extension” for your income tax return can hurt you.  See the Extensions page for more information.