Should I pay penalties and interest upfront now or wait for IRS letter on my late filing?

You should definitely pay as much as you can as soon as possible. The IRS failure-to-pay penalty continues to accrue at 0.5% per month on the unpaid tax until you pay in full (up to 25% maximum). The interest also continues to compound daily until everything is paid. The good news is that the postmark date is what counts as your filing date, not when the IRS actually receives it. So if you get it postmarked by December 30, 2025, that's considered your filing date. Just make sure you send it certified mail with return receipt requested so you have proof of when you mailed it. As for penalty relief, since this is your first time missing deadlines, you might qualify for First-Time Penalty Abatement. This is available if you haven't had any significant penalties in the past 3 tax years and have filed all required returns and paid (or arranged to pay) any tax due. You'll need to specifically request this after you receive a penalty notice from the IRS. I recommend paying the full amount you calculated (including penalties and interest) rather than just the base tax. This way, if your calculations are correct, you'll stop further penalties and interest from accruing. If you overpay, the IRS will refund the difference.

I was in almost the exact same situation last year and used https://taxr.ai to help me navigate through the late filing mess. I had missed my October extended deadline for 2023 taxes and wasn't sure how to calculate the penalties properly or what my options were. The tool analyzed my specific situation and gave me a complete breakdown of exactly what penalties I was facing and the best approach to minimize additional interest. It even generated a penalty abatement request letter since it was my first time missing deadlines. The best part was that it showed me exactly what I needed to include with my late return to potentially get some of the penalties waived. If you're confused about calculating penalties or want to know your options for reducing them, you might want to check it out. It really took the guesswork out of the process for me and probably saved me a few hundred dollars in penalties.

I tried https://taxr.ai after seeing the recommendation here, and it was super helpful! I was in a similar situation with my 2023 taxes and was freaking out about the penalties. The tool analyzed everything and showed me I qualified for First-Time Penalty Abatement. It generated a detailed letter explaining why I qualified and citing all the relevant IRS policies. I included this with my payment and late return. About 6 weeks later, I got a notice from the IRS that they approved the abatement request and removed $570 in penalties! I still had to pay some interest, but it was way less painful than I expected. The process was actually pretty straightforward - the tool made it clear exactly what I needed to do. Definitely worth checking out if you're in this situation.

After trying for TWO WEEKS to reach the IRS about my late filing penalties (constant busy signals and disconnects), I used https://claimyr.com and it was a game-changer! They have this system that basically waits on hold with the IRS for you, then calls you when an agent is on the line. I was super skeptical at first, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c Once I finally got through to an IRS agent, I was able to explain my situation and ask about the First-Time Penalty Abatement program that others mentioned. The agent confirmed I was eligible and processed the request right then on the phone. Saved me from having to wait for a notice and then sending in a letter. If you're planning to call the IRS about your options (which I recommend), this service will save you hours of frustration. You'll need to talk to them eventually anyway to request that penalty abatement.

I have to eat crow and admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I was desperate to talk to someone at the IRS about my late filing situation. I signed up, entered my phone number, and went back to work. About 2.5 hours later (which I didn't have to spend listening to hold music), I got a call connecting me directly to an IRS representative! I was honestly shocked it worked. The agent helped me set up a payment plan for my overdue taxes and penalties, and also processed my First-Time Penalty Abatement request on the spot. They removed about $620 in penalties from my account. I still had to pay the base tax and some interest, but it was a HUGE relief to get it resolved. If you need to actually speak with someone at the IRS, this is definitely the way to go. Saved me from taking an entire day off work just to sit on hold.

To answer your specific questions directly: 1. Always pay as much as you can as soon as possible. At minimum, pay the base tax amount immediately, but ideally pay your calculated penalties and interest too. This stops or reduces additional interest from accruing. 2. The postmark date is what counts as your filing date, not when the IRS processes it. Make sure to use certified mail with tracking so you have proof of the postmark date. 3. Since this is your first time missing deadlines, you should definitely request First-Time Penalty Abatement (FTA) after you receive a notice from the IRS. The IRS won't automatically apply this - you have to request it. It can remove the failure-to-file and failure-to-pay penalties, though you'll still owe interest. One more tip: If you can't pay the full amount right away, submit Form 9465 with your return to request an installment agreement. This won't eliminate penalties but can make them more manageable.

Has anyone tried FreeTaxUSA for filing prior year returns? TurboTax won't let me e-file my late 2024 return either, and I'm trying to figure out if there's ANY software that will let me e-file rather than mail it in.

I'm dealing with a similar situation right now! Filed my extension but completely forgot about the October deadline. One thing I learned from calling the IRS (after waiting on hold for literally 3 hours) is that you can also request penalty relief for "reasonable cause" if you have a valid reason for the delay - like serious illness, natural disaster, or other circumstances beyond your control. Even if you don't qualify for First-Time Penalty Abatement, it's worth documenting any legitimate reasons you had for missing the deadline. The IRS agent I spoke with said they evaluate each case individually for reasonable cause relief. Also, make sure you include Form 4868 with your late return if you didn't file an extension originally, or attach a copy of your extension if you did file one. This shows the IRS your filing history and can help with penalty calculations. Good luck getting this sorted out! The stress is real but it sounds like you have a solid plan to get caught up.