Filed an extension? Great—but remember, an extension gives you more time to file, not to pay. If you still owe tax from April, penalties and interest are already running. And if you fail to file by the extension deadline, the combined IRS penalties can reach up to 47.5% of the unpaid tax (interest accrues separately).
The penalty stack (plain English)
- Failure-to-file: 5% per month (or part of a month) on unpaid tax, capped at 25%.
- Failure-to-pay: 0.5% per month (or part), capped at 25%—often reduced to 0.25% per month if you’re on an approved payment plan.
- When both apply in the same month, the late-file piece is reduced by the late-pay amount (so 4.5% + 0.5%). If you’re over five months late and still owe, that’s 22.5% + 25% = 47.5%.
- Interest: compounds daily at the IRS underpayment rate (updated quarterly).
Why acting now saves you real money
Filing stops the big late-file penalty from growing. Paying anything today shrinks the base that both interest and late-pay penalties hit. Even a small payment plus a formal plan can meaningfully cut the total.
State angle (California included)
States mirror this logic: the extension is usually to file, not to pay. In California, balances were due in April; missing the filing deadline triggers separate state penalties and interest. If CA applies to you, fix both returns so you don’t run two penalty clocks.
Pre-deadline checklist (do this this week)
- File even if you can’t pay in full. It caps the steep late-file penalties.
- Make a partial payment now. Every dollar reduces interest and late-pay.
- Set up a payment plan with the IRS if needed (often lowers the late-pay rate).
- Pull your documents: W-2/1099s, 1098s, K-1s, brokerage/crypto, business books.
- Estimate if you must. File with best-available numbers and amend later—don’t blow the deadline.
- Handle the state return at the same time (CA/other states).
- Consider penalty relief: First-Time Abate or reasonable-cause relief may apply if you’ve been compliant or had serious hardship.
How Black Inc (LA) can help right now
- Same-day filing prep to stop late-file penalties from stacking.
- Pay-now vs. payment-plan strategy to minimize interest.
- Penalty-relief requests (where you qualify) for IRS and state.
- Clean-up bookkeeping so next year isn’t a scramble.
Free consult (Los Angeles): (323) 364-5589 • 742 S Atlantic Blvd, Los Angeles, CA 90022. We’ll review your situation, file fast, and map the cheapest path to getting current.
Informational only; not tax or legal advice. Always confirm the latest IRS/state guidance for your specifics.