Your federal tax return is late. The Form 4868 in your records protected the filing deadline through October 15, but the final K-1 arrived after that date. If tax remains unpaid, waiting another month can add penalties and interest.
The first priority is separating two problems: filing an accurate return and resolving the amount owed. The IRS treats them differently. The penalty for failing to file is generally much steeper than the penalty for failing to pay, so delaying the return until you can pay the entire bill can make the situation worse.
For most taxpayers, 2025 federal individual income tax returns were due April 15, 2026. A valid extension requested by that date generally moved the filing deadline to October 15, 2026.
Filing in August with a valid extension is not late. Paying a balance in August may be late because an extension provides additional time to file, not additional time to pay. Taxes were still generally due April 15.
Federally declared disasters, military service, combat-zone duty or certain international filing rules can change these dates. State requirements also need a separate review.
Business and personal returns may also require separate extensions. Kingsview’s guide to K-1 extensions for business owners explains why those deadlines must be coordinated.
The amount the IRS may charge depends largely on whether tax was still unpaid when the deadline passed. Someone who filed late but was due a refund is in a different position from someone who filed late with a large outstanding balance.
| Potential charge | General federal rule | Important detail |
|---|---|---|
| Failure to file | 5% of unpaid tax for each month or partial month, up to 25% | Applies when a required return is filed after its deadline, including extensions |
| Failure to pay | 0.5% of unpaid tax for each month or partial month, up to 25% | Generally runs from the original payment deadline |
| Both penalties | Generally 5% combined for the same month | The filing penalty is usually reduced to 4.5% when the 0.5% payment penalty also applies |
| Interest | Variable rate compounded daily | Continues until the balance is paid and can change quarterly |
| More than 60 days late | A minimum filing penalty may apply | For returns required to be filed in 2026, generally the lesser of $525 or 100% of the unpaid tax |
These percentages are applied to unpaid tax, not gross income. The IRS explanation of filing and payment penalties should be checked for the current minimum penalty and interest rules when a late return is prepared.
Waiting to file until the entire tax bill is available can allow the larger failure-to-file penalty to keep growing. File an accurate return as soon as it can be completed, then pay as much as reasonably possible. A partial payment can reduce the balance on which future charges are calculated.
The IRS currently offers short-term payment plans of up to 180 days for qualifying individuals who owe less than $100,000 in combined tax, penalties and interest. Individuals owing $50,000 or less may qualify to apply online for a monthly installment agreement after filing all required returns. Other arrangements may be available above those thresholds.
A payment plan does not stop applicable penalties and interest from accruing. Before liquidating investments, tapping retirement accounts or borrowing against property, review the wider tax and financial consequences.
There is generally no federal failure-to-file penalty when the IRS owes the taxpayer a refund. A return must still normally be filed within three years of its due date to claim withholding, estimated payments or refundable credits. The IRS may also hold a current refund when another required income tax return remains unfiled.
Do not assume a refund is due based on last year’s result. A stock sale, Roth conversion, business distribution or bonus can change the calculation.
An extension changes the paperwork deadline. It generally does not move the deadline for completing financial transactions assigned to the prior tax year.
An extension does not extend an applicable required minimum distribution deadline. A missed RMD may face a 25% excise tax, potentially reduced to 10% when corrected within the applicable two-year window, and may need to be reported on Form 5329. First-year RMDs and inherited accounts can follow different timelines, so review the correction with a qualified professional. The IRS RMD guidance provides the current federal framework.
Tax-loss harvesting follows the same principle. Filing late does not allow an investor to sell today and claim the loss for last year. The return can report transactions completed during that tax year and eligible loss carryforwards. Wash-sale restrictions may still defer a loss, as explained in Kingsview’s guide to wash-sale rules.
Beginning with eligible 2025 tax-year returns, the IRS introduced Automatic Exemption from Penalty, or AEP. A taxpayer with a timely filing and payment history for the prior three years may automatically avoid certain failure-to-file or failure-to-pay penalties.
AEP does not eliminate the tax or interest, and it does not cover every return or penalty. The IRS is phasing out First Time Abate as AEP takes effect, although some taxpayers receiving notices during the transition may still need to contact the agency.
Taxpayers who do not qualify may request relief based on reasonable cause. Serious illness, natural disasters, unavailable records or certain system problems may support a request. Reliance on a preparer, lack of knowledge or lack of money generally does not qualify by itself.
Keep records showing what prevented timely compliance and what was done to correct it. Relief should not be assumed before the IRS confirms it. Review the current IRS penalty-relief rules before responding to a notice.
When a required return remains missing, the IRS may prepare a substitute using information from employers, financial institutions and other payers. That return may leave out deductions, credits or business expenses. Filing an accurate return may allow the IRS to adjust the account, even after a substitute has been prepared.
An unfiled return can also keep the federal assessment period open. When a required return is never voluntarily filed, the IRS says it may assess tax at any time under its substitute-return procedures.
Start with the return, then address the balance and the reason the deadline was missed.
For more complicated income situations, Kingsview’s guide to avoiding tax surprises as a high earner can help identify where withholding and estimated payments commonly break down.
Once the return is filed and a payment path is established, attention can shift from penalties to prevention. Coordination among the taxpayer, tax professional and wealth advisor can make the next deadline far less disruptive.