MARK KOHLERMain Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, Main Street Professionals, LLC · Owner at Main Street Professionals, LLC

What Does the IRS Actually Charge If You File a Tax Extension?

12 Apr 2026 · 1 min

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Mark Kohler breaks down what an IRS extension actually costs. On a $1,000 tax bill, you pay 0.5% monthly penalty plus roughly 7% annual interest. File by April 15 but pay late, and you'll owe about $50 extra by July, a small price for time to find deductions or a better accountant.

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So if you owe the IRS money and you don't send it in on April 15th, you have that penalty calculation. Well, the IRS also wants interest on their money. So let's stick with that $1,000 example. You owe the IRS $1,000, you file your extension, but they're still waiting for their money. We covered the penalty at 0.5% per month. Now the interest amount changes quarterly based on IRS notices, but we already know for this year it's set at approximately 7%. So it's about 0.5% a month, just like the penalty issue. So if I don't pay I don't pay the IRS that $1,000 until July, just like our prior example, I might owe the IRS interest of around $30. So interest of approximately $30, 7% per annum, the penalty of half a percent per month, approximately $20. I'm out $50 to pay the IRS the $1,000 in July and take the time to find a better accountant and find more write-offs for my tax return and not stress out in fricking April. You're welcome.