What to expect after tax rejection, then after I was granted an extension? What are my penalties on a $400 owed to IRS? When I proceed to finish my taxes, why is it asking if I've set up a payment plan with my IRS account?
If your original e-filed tax return was rejected, and you then successfully filed an extension, you would generally have until October 15th to file the tax return. If, on that tax return, it showed that you owed income taxes to the IRS, you would be subject to a late payment penalty on taxes that were not paid by the April 15th deadline.
The current failure to pay penalty for tax year 2024 is 0.5% of the unpaid taxes for each month or part of a month that the tax remains unpaid. The penalty won't exceed 25% of your unpaid taxes.
Let's say that your tax return filed on October 15th shows a tax due of $500, and you pay that amount on the same day. There are 6 months between April and October. Here is the penalty calculation:
$500 * 6 months * 0.5% = $15.00.
The reason why you are being asked if you have an approved payment plan is because the failure to pay penalty is reduced to 0.25% per month (or partial month) during your approved payment plan.
Here is an IRS resource that discusses the failure to pay penalty in greater detail: