Filed My Taxes Late in California (2026): How I Reduced My IRS Penalty on a $150K Income

I didn’t mean to file my taxes late.

It wasn’t one big mistake, just a bunch of small ones stacking up. Work got busy, I kept putting it off, and I had this vague assumption that I’d “figure it out soon.” Then suddenly, the deadline had passed.

By the time I finally sat down to deal with it, I was about two months late.

For context, I’m 28, living in California, making around $150K a year. Mostly W-2 income, with a little 1099 on the side. When I ran everything through my tax software, I got hit with numbers I hadn’t fully prepared for:

Federal tax owed: about $10,000
California tax owed: about $3,000
Total: ~$13,000 - $14,000

That was already uncomfortable. But the bigger issue was realizing that filing late when you owe money comes with penalties—and they add up fast...

The “Oh Sh*t” Moment

Once I started looking into how penalties work, things got real pretty quickly.

There are two main ones:

A filing penalty (5% per month)
A payment penalty (0.5% per month)

Since I was about two months late, I was roughly looking at:

~$1,100 for not filing on time
~$110 for not paying on time
Plus some interest

So in total, around $1,300 extra just for being late.

That was the moment I realized this wasn’t something I could keep procrastinating.

What I Did First (That Helped More Than I Expected)

I filed my taxes immediately.

Not when I had the money ready. Not when I felt fully prepared. Just… right away.

This turned out to be way more important than I expected.

The filing penalty (5%) is much higher than the payment penalty (0.5%). So even if you can’t pay everything, just filing stops the most expensive part from growing.

Right after filing, I paid about $12,000, even though I couldn’t cover the full amount yet.

That left me with a smaller remaining balance, which meant:

Less penalty going forward
Less interest piling up
The Step That Actually Changed Everything

A few weeks later, I got a notice from the IRS showing the penalties.

At this point, I had already accepted that I’d just have to eat the ~$1,300 cost. But I did a bit more digging and found something called

First-Time Penalty Abatement.

Basically, if you’ve been good about filing and paying taxes for the past few years, the IRS may remove certain penalties.

I hadn’t had any issues in previous years, so I qualified.

I called them, explained my situation, and asked if I could get the penalty removed.

That was it. No complicated argument. No back-and-forth.

What I Actually Ended Up Paying

Here’s how it played out:

The ~$1,100 filing penalty → gone
The ~$110 payment penalty → still there
Interest → still there

So instead of ~$1,300, I ended up paying about $150 total in penalties and interest.

That’s roughly an 87% reduction, just from taking a few specific steps.

What I Took Away From This

Looking back, a few things mattered way more than I expected:

Filing matters more than paying (at least initially)
I always assumed the opposite.
- Partial payment is still worth it
You don’t need to have everything ready to make progress.

- There are systems in place to help—if you ask
The abatement wasn’t automatic. I had to request it.

What I’d Do Differently Next Time

Honestly, the easiest fix would’ve been filing an extension.

That alone would have avoided the biggest penalty entirely.

Other than that:
- I would’ve estimated my taxes earlier
- I wouldn’t have waited until things felt “perfect” to file

If You’re in the Same Spot

If you’re reading this because you also missed the deadline, here’s the simplest version of what I’d do:

File as soon as possible
Pay whatever you can
Wait for the IRS notice
Ask about penalty abatement

Even if the situation feels messy, it’s usually more fixable than it seems at first.

Final Thought

Missing the deadline felt like I had already messed things up beyond repair.

But once I actually broke it down and took action, it turned out to be pretty manageable.

Not ideal...but definitely not the disaster I thought it would be.