Two kinds of penalties
Late penalties can be a bit tougher to calculate and depend on whether you've filed your return. If you owe the IRS a balance, the penalty is calculated as 0.5% of the amount you owe for each month (or partial month) you're late, up to a maximum of 25%. This late penalty increases to 1% per month if your taxes remain unpaid 10 days after the IRS issues a notice to levy property.
On the other hand, if you don't file your tax return on time, the penalty is much more severe. The penalty for failing to file is 5% of the amount you owe per month (or partial month), which combines a 4.5% late filing fee with the 0.5% late payment fee. Now, the late filing fee also maxes out at 25% of the unpaid balance, but the late payment fee can keep running up to a combined total of 47.5% of the unpaid tax.
Finally, if you filed your return more than 60 days late, the minimum penalty for failure to file is $135 or 100% of the tax you owe, whichever is smaller.
As you can see, the monthly penalty for not filing your tax return is 10 times higher than the penalty for paying late. So, if you cannot pay the amount you owe by the filing date, it's important to file your return anyway.
