IRS Penalty And Interest Calculator

 
 
When you don’t pay your taxes on time the IRS will automatically calculate  penalties and interest to your outstanding tax liabilites.  If  after paying your taxes you are owed a tax refund the IRS dependent on there discretion may pay you interest on an outstanding refund check. Penalties and Interest will not be calculated if you are due to receive a refund, because you are not indebted to them, there is no interest or penalties assessed.
There are three types of penalties
  1. Failure To Pay Penalty
  2. Failure To File Penalty
  3. Compound Interest

The Failure to Pay Penalty

This penalty which is the most common of the three is summed up and calculated by your total tax liability.  The interest that is applied is .05% for each every month that you have failed to pay. This penalty is engaged within the first 30 days of nonpayment and is calculated until the final payment is made and the taxpayer is within IRS compliance.

The Failure to File Penalty

This penalty which is the second most common is calculated determining the amount of time between when you were suppose to file and the time you actually did decide to file . When this penalty is engaged the taxpayer will be assessed  5% for each and every month the taxpayer is not in compliance, although this specific penalty has a maximum cap of 25%. The percentage is calculated by the totla amount that must be remitted to the IRS. The rule of thumb is, if your tax return is more than 5 months late, then all you have to do is multiply the total amount by 25% to determine your exact amount that you will liable to the IRS.

Compound Interest

Interest is calculated using your total tax liability . Interest rates are adjusted every three months. Currently, the IRS  may and will calculate interest for every day your taxes are not paid, the trick is to not and try and outsmart the IRS but maintain IRS compliance or face the downside of penalties and interest.

 

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