Back Taxes Owed Estimator
Estimate the total amount owed on unpaid taxes, including the IRS failure-to-pay penalty and daily compounding interest based on the federal short-term rate plus 3%.
Current IRS rate = federal short-term rate + 3%. Check IRS.gov quarterly for updates.
Formulas Used
Unpaid Balance = Original Tax Owed − Partial Payments Made
Failure-to-Pay (FTP) Penalty [IRC §6651(a)(2)]:
= min(Unpaid Balance × 0.5% × Months Overdue, Unpaid Balance × 25%)
Failure-to-File (FTF) Penalty [IRC §6651(a)(1)] — only if return not filed:
= max(min(Unpaid Balance × 5% × Months, 25% × Unpaid Balance) − FTP Penalty, 0)
Interest [IRC §6601] — daily compounding:
= (Unpaid Balance + Penalties) × ((1 + r/365)d − 1)
where r = annual interest rate, d = months × 30.4375 days
Total Owed = Unpaid Balance + FTP Penalty + FTF Penalty + Interest
Assumptions & References
- Failure-to-Pay penalty accrues at 0.5% per month (or part of a month), capped at 25% of unpaid tax (IRC §6651(a)(2)).
- Failure-to-File penalty accrues at 5% per month, capped at 25%; the net FTF is reduced by the FTP penalty already applied (IRC §6651(a)(1)).
- IRS interest compounds daily at the federal short-term rate + 3%, adjusted quarterly (IRC §6601, §6621). Default shown is 8% (approximate 2024 rate).
- A month is approximated as 30.4375 days (365 ÷ 12) for daily compounding.
- Partial payments reduce the unpaid principal before penalty and interest calculations.
- This estimator does not account for installment agreement adjustments, penalty abatement, offers in compromise, or state-specific rules.
- References: IRS Penalties | IRS Interest Rates | IRC §§6601, 6621, 6651.