Penalty and interest

[NotEasy]

A taxpayer files an extension before the due day but does not make a payment. Then he pays the tax at the time when he files his tax return after 4/18. Is there any penalty and interest?

I am sure there will be interest. What is the interest rate that the IRS is charging now?

[JohnH]

I think interest is about 4% APR right now. Add to that the 1/2 of 1% per month Failure to Pay penalty (6% APR), and you have an effective interest rate of 10% APR. (I consider it all just a cost of borrowing money, since neither the interest or the penalty is tax deductible for an individual) Not a bad rate for someone who doesn't have the financial resources to pay.

Certainly cheaper than paying one's taxes with a credit card unless it's carrying a really good bargain rate.