How the calculators work

Every calculator on this site runs in your browser on one engine and one parameter file. A script reads the IRS pages, forms and tables and writes that file with each rate, fee, threshold and standard, the page it comes from and the date it was read (October 20, 2026 for this edition). This page lists the rules, the formulas, the tests and what is left out. The results are estimates: the IRS decides, on the figures of your account.

1. Late filing and late payment penalties

Both come from IRC section 6651, as the IRS explains them on its failure to file and failure to pay pages.

• Late filing: 5 % of the tax unpaid on the due date, for each month or part of a month the return is late, at most five months (25 %). The due date is the original one, or six months later with a valid extension. In a month when the late payment penalty also applies, the late filing penalty is reduced by it.
• Minimum: for a return more than 60 days late, the penalty is at least the smaller of the tax due and a fixed amount set by the year the return was due: $525 for returns due from 2026, $510 for returns due from 2025, $485 for returns due from 2024, $450 for returns due from 2023.
• Late payment: 0.5 % of the unpaid tax each month or part of a month from the original due date (an extension to file does not extend the time to pay); 0.25 % while an installment agreement under section 6159 runs for an individual who filed on time (IRC 6651(h)), not during a short-term plan of up to 180 days, which the calculators treat at the full rate; 1 % from 10 days after a notice of intent to levy. The total stops at 25 % of the tax.

The calculators count months from the due date to the same day of each following month, as the penalty pages do: one day after a month counts as a new month.

2. Interest

Interest on underpayments is the federal short-term rate plus 3 points (IRC 6621), set each quarter and published by the IRS on its quarterly interest rates page, and compounded daily (IRC 6622). The engine adds each day the balance times the rate of that day's quarter divided by 365 (366 in a leap year). It holds the 40 quarters from first quarter of 2017 to fourth quarter of 2026. Days after the last published quarter keep its rate, and the result says so; the next rate is announced by the IRS in November 2026, set at the federal short-term rate plus 3 points (IRC 6621).

Interest runs on the tax and on the penalties. The engine charges interest on the late filing penalty from the due date of the return, the extended date when an extension was filed (IRC 6601(e)(2)(B)), and on each month's late payment penalty from the month it is added. The IRS charges interest on the late payment penalty from the date of the notice and demand; the difference is small on most balances and goes in the direction of a slightly higher estimate.

3. Payment plans

Fees, thresholds and terms come from the payment plan page and the Simple Payment Plan page: short-term plan up to 180 days for balances under $100,000, no fee; Simple Payment Plan for balances up to $50,000; set-up fees $29, $107, $69 and $178, $43 or waived for low income. The plan calculator runs the plan month by month: daily interest on the whole balance, the monthly late payment penalty on the unpaid tax, then the payment applied to tax, then penalties, then interest. The monthly payment shown is the smallest whole dollar that clears the balance in the term chosen, found by bisection.

4. Allowable living expenses

The Collection Financial Standards in force since June 29, 2026:

• National standards for food, housekeeping supplies, apparel, personal care and miscellaneous: $867 for 1 person, $1,558 for 2 persons, $1,857 for 3 persons, $2,176 for 4 persons, plus $397 for each additional person. Allowed in full.
• Out-of-pocket health care: $90 a person under 65 and $163 at 65 or over. Allowed in full.
• Housing and utilities: the county figure for the household size (1 to 5 or more) from the IRS table of each state, 3,223 counties in all. The lesser of the amount paid and the standard is allowed.
• Transportation: ownership up to $703 a car (two cars at most), operating costs by Census region or by metropolitan area, public transportation $220. The lesser of the amount paid and the standard is allowed.
• Health insurance, current taxes, child care and court-ordered payments: the amounts you enter.

5. Offer in compromise

The reasonable collection potential follows Form 656-B and Form 433-A (OIC), Rev. 4-2026: assets at quick-sale value (80 % of market value) minus loans; $1,000 kept on bank accounts; $3,450 off the equity of one car per taxpayer; $11,980 off furniture and personal effects; plus the remaining monthly income (income minus allowable expenses) times 12 for a lump-sum offer or times 24 for a periodic offer. Application fee $205 and 20 % of a lump-sum offer, both waived under the Low-Income Certification. The official check remains the IRS Offer in Compromise Pre-Qualifier.

6. Levy, relief, notices

Wage levy: the exempt amount of Publication 1494 for 2026, the standard deduction of the filing status plus $5,300 per dependent, divided by the number of pay periods, each part rounded to the cent as the publication's tables do. Penalty relief: First Time Abate and the Automatic Exemption from Penalty on the IRS penalty relief page. CP2000: accuracy penalty of 20 % when the understatement exceeds the greater of 10 % of the correct tax and $5,000 (IRC 6662). Passport: the yearly threshold of IRC 7345, $66,000 for 2026.

7. Tests

The official examples and hand computations are automated tests; if one fails, the site does not build.

8. What is not modelled

• Payments made after the due date but before today, and refunds applied to the balance: enter the balance that remains.
• The estimated tax penalty, the accuracy penalty outside the CP2000 calculator, fraud penalties and business payroll tax penalties.
• State income tax debts, which follow each state's own rules.
• How the IRS values a particular asset, business income or future income that differs from the past; dissipated assets; the special circumstances an offer examiner can weigh.
• Bankruptcy and the collection statute suspensions beyond the general rules described on the pages.

Corrections: contact page. These are estimates made to compare options, not tax advice; the IRS decides on every plan, offer and penalty.