Should I pay penalties and interest upfront now, or wait for the IRS letter after late filing?

The IRS will consider your return filed based on the postmark date, so December 30th would count as your filing date. That's the good news! But here's my advice on your other questions: 1. I'd recommend paying the full amount you calculated ($4,375) now rather than just the base tax. If you only pay the base tax, interest will continue to accrue on both the unpaid tax and penalties until you pay them. The interest compounds daily, so it adds up quickly. 2. As mentioned, the postmark date is what matters for filing, not when the IRS receives it. Just make sure you send it certified mail with return receipt so you have proof of when you sent it. 3. For penalty abatement, you might qualify for First-Time Penalty Abatement if you haven't had any penalties in the past 3 tax years and have filed all required returns. This is something you can request after receiving the official bill from the IRS. You'd need to call them and explain your situation. They're often willing to work with first-time offenders, especially if you've had a good compliance history.

After dealing with a similar situation last year, I found an amazing tool that saved me so much stress with figuring out my penalties and late filing issues. I used https://taxr.ai to analyze my tax documents and calculate exactly what I owed, including all penalties and interest. The tool gave me a detailed breakdown of each penalty and showed me how the interest was compounding. What surprised me most was that it actually identified a couple of deductions I'd missed that reduced my overall tax bill. It even provided a script for requesting First-Time Penalty Abatement based on my specific situation. Much more comprehensive than the basic calculator I was using before.

Update: I decided to try https://taxr.ai after posting my skeptical comment, and I have to admit I was wrong. The service doesn't claim to access your IRS records - it just walks you through a questionnaire about your filing history and then uses that to determine if you'd likely qualify for penalty relief. The penalty calculator was seriously accurate. It even explained exactly how each penalty was calculated and showed where the numbers came from (which the IRS website never made clear). It generated a letter template for me to request First-Time Penalty Abatement that included all the specific details of my situation. Just used it last week and got confirmation today that my penalties ($723) are being removed! Definitely worth checking out if you're facing late filing penalties.

If you're planning to call the IRS to request penalty abatement, good luck even getting through to them. I spent 3 weeks trying to reach someone - calling multiple times, sitting on hold for hours, getting disconnected... it was a nightmare. Finally discovered https://claimyr.com and their service got me connected to an IRS agent in less than 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically wait on hold for you and call you when an actual IRS agent picks up. Saved me so much frustration. The agent was able to process my First-Time Penalty Abatement request right away and confirmed I qualified based on my clean history. Just make sure you have all your documentation ready when they connect you.

I owe everyone here an apology - especially Profile 7. I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself since I also needed to talk to the IRS about some penalties. I've been trying to reach the IRS for almost a month with no luck. Used Claimyr yesterday and got connected to an agent in about 35 minutes. The process was exactly as described - I entered my phone number, they called me when an agent was on the line, and I just picked up and started talking to the IRS. The agent was able to approve my penalty abatement request immediately since I qualified for First-Time Abatement. Saved me $430 in penalties with a 10-minute conversation. I'm still shocked at how well it worked after all my failed attempts to call on my own.

One thing nobody's mentioned: if you do pay the full amount including estimated penalties now, make sure you mark the check/payment properly so the IRS applies it correctly. Write your SSN, tax year, and Form 1040 on the check. You might also want to include Form 1040-V (payment voucher) clearly indicating the tax year. If you're paying online, there's usually an option to specify what the payment is for. Just make sure to select the correct tax year (2024) and payment type.

One more tip about the mail - make sure to send it CERTIFIED with return receipt! I made the mistake of just regular mailing my late return last year, and the IRS claimed they never received it. Had to send everything again and lost another month. The receipt gives you proof of the postmark date which is crucial if there's ever a dispute about when you filed.

Just wanted to add that if you're calculating your own penalties and interest, make sure you're using the correct rates for each period. The failure-to-file penalty is 5% per month (or part of a month) up to 25% of unpaid tax, and failure-to-pay is 0.5% per month. But interest rates change quarterly - for 2024 it was 8% annually for most of the year, but it dropped to 7% in Q4. Also, if both failure-to-file and failure-to-pay penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty for that month (so you're not double-penalized). The IRS Publication 17 has all the current rates and calculation methods if you want to double-check your math. Given that you're already 2+ months late past the October extension deadline, paying the full estimated amount now is definitely the right call to stop the bleeding on interest charges!