IRS Penalties and Interest Calculator
Estimate failure-to-pay penalties, failure-to-file fees, and daily compounding interest charges on past-due federal taxes. Fast, accurate, and 100% private.
Step-by-Step Usage Guide
Estimate past-due IRS balances and compounding interest in three simple steps:
Enter the unpaid federal tax principal and number of months overdue.
Choose whether returns were filed on time or both filed and paid late.
Click calculate to see failure-to-pay, failure-to-file, and interest lines.
Failure-to-Pay vs. Failure-to-File Penalties
The IRS assesses separate statutory additions depending on compliance type:
- Failure-to-Pay (FTP): Charged at 0.5% per month (or partial month) on unpaid tax, capped at 25%.
- Failure-to-File (FTF): Charged at 5% per month on unpaid taxes. When both apply, FTF is reduced to 4.5% (totaling 5% combined per month) up to a 25% cap.
How IRS Underpayment Interest Compounds
Unlike simple loan interest, IRS interest compounds daily on both the unpaid tax balance and all accrued statutory penalties.
- Quarterly Rate Updates: IRS rates adjust quarterly based on the federal short-term rate plus 3%.
- No Statutory Cap: Interest continues to accrue indefinitely until the tax liability is paid in full.
IRS Penalty & Interest Structure Overview
| Charge Type | Monthly Rate | Maximum Cap | Compounding Basis |
|---|---|---|---|
| Failure to Pay (FTP) | 0.5% per month | 25% of Unpaid Tax | Monthly flat percentage |
| Failure to File (FTF) | 4.5% – 5.0% per month | 25% of Unpaid Tax | Caps after 5 months |
| Combined Penalty (Both Late) | 5.0% per month | 25% of Unpaid Tax | 4.5% FTF + 0.5% FTP |
| IRS Underpayment Interest | Variable (~8% Annual) | No Limit | Compounded Daily (365/Year) |
Frequently Asked Questions
How does the IRS calculate interest on unpaid taxes?
The IRS computes interest by compounding the statutory annual rate daily (divided by 365) against your total outstanding balance, which includes the unpaid tax principal and accumulated penalties.
Can IRS penalties be reduced or waived?
Yes. Taxpayers with clean prior filing histories may qualify for administrative relief under the IRS First-Time Penalty Abatement (FTA) policy or by demonstrating reasonable cause.
Is my tax data private and secure?
Yes. True to our client-side standard, all calculations run locally in your web browser. No personal tax figures or financial balances are logged or transmitted across servers.