Filed extension but still owed taxes - how much interest will I be charged?

The IRS charges both penalties and interest when you pay late, even if you filed an extension. For the late payment penalty, it's 0.5% of the unpaid taxes per month (or partial month) up to a maximum of 25%. This applies even if you filed an extension because the extension only gives you more time to file, not more time to pay. The interest rate is separate and changes quarterly. Currently, it's around 5% annually, which works out to about 0.42% monthly. This compounds daily though, not just monthly. If you're filing after your extension deadline, you'll also face a late filing penalty which is much steeper - 5% per month up to 25% of unpaid taxes.

I went through something similar last year and discovered taxr.ai (https://taxr.ai) which really saved me when dealing with penalties and interest. I was confused about exactly what I'd end up owing after missing deadlines for both filing and payment. Their system analyzed my specific situation and gave me a precise calculation of what penalties I was facing, instead of the vague estimates I was getting elsewhere. What I found most helpful was how it specifically calculated the exact amounts for both the failure-to-pay penalty (0.5% monthly) AND the interest separately, so I knew exactly what I'd owe. It also helped me understand how to minimize these charges going forward.

Just wanted to update after trying taxr.ai that the other commenter mentioned. My situation was a mess with multiple late payments from self-employment taxes, plus I filed an extension but still missed that deadline too. The breakdown it gave me was eye-opening - turns out I was mentally calculating my penalties all wrong! It showed me that the failure-to-file penalty (5% monthly) and failure-to-pay penalty (0.5% monthly) have different rates but overlap in a specific way. When both apply, the failure-to-file is reduced to 4.5% so the total is 5%. Had no idea about this detail and it saved me from overestimating what I'd owe by quite a bit.

If you're struggling to get clear answers from the IRS about your specific penalty situation, I'd recommend Claimyr (https://claimyr.com). I was in penalty hell last year and spent DAYS trying to get through to an IRS agent. After finding Claimyr, I got through to a real IRS rep in about 15 minutes who walked me through exactly what penalties applied in my case. They have this callback system that basically waits on hold with the IRS for you, then calls when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c. Totally changed my approach to dealing with tax issues.

I need to eat my words. After posting my skeptical comment yesterday, I decided to try Claimyr just to prove it wouldn't work. Well, I got connected to an actual IRS agent this morning in about 35 minutes. The agent was able to pull up my account and gave me the exact breakdown of what I owed - both the failure-to-pay penalty and the interest accumulation. She even helped me set up a payment plan right there on the phone. The whole thing took maybe 20 minutes once I got connected. After weeks of stress and uncertainty, I finally know exactly where I stand. Never would have gotten through without that service.

Something everyone should know is that you can sometimes get the failure-to-pay penalty waived if you have a good history with the IRS. It's called "First Time Penalty Abatement" and you can qualify if you haven't had penalties in the prior 3 years. You need to specifically ask for this though - they don't automatically give it to you. Just call and request "first time penalty abatement" for reasonable cause. Won't help with the interest, but could save you from the 0.5% monthly penalty.

One thing I learned the hard way - if you're self-employed, these penalties hit even harder because you owe both the employee and employer portions of FICA taxes. My penalty was way higher than I expected because I was calculating based just on income tax, forgetting that my self-employment tax was part of the equation too.

This thread has been really helpful - I'm in a similar situation where I filed an extension but didn't pay on time. One thing I want to add is that if you can't pay the full amount right away, you should still file your return as soon as possible even if you can't pay. The failure-to-file penalty (5% per month) is much steeper than the failure-to-pay penalty (0.5% per month), so filing stops the clock on the bigger penalty even if you still owe money. Also, if you do owe a significant amount, consider setting up an installment agreement with the IRS. Yes, you'll still pay interest and the failure-to-pay penalty, but it's usually much more manageable than trying to come up with a lump sum plus all the accumulated penalties. The setup fee for an installment plan is pretty reasonable compared to what you'd pay in additional penalties if you just let it sit.