Late Penalties for 1040ES and 540ES?

Question

Does anyone know what the late filing penalty is for the 1040ES or 540ES payments paid after their due dates?

I am not talking about underpayment, but strictly paying my estimate payment after the 15th of April, June, etc.

For example, let's say I make an estimate payment which is above what I actually owe, and all of my estimate payments for the year total to more than what I owe for the year.

Now let's say my second estimate payment was made on June 30th instead of the June 15th due date.

What is my penalty?  How is it calculated?  When is it imposed?  Can it be paid at the time of the estimate payment?  Will it get automatically taken from the estimate payment or is it imposed separately?

I just spent 3hrs waiting to get through to the FTB and they could not answer definitively.

I also called the IRS and the rep there could not answer either.

Ashish Acharya · Answer

@Paul Fogarty Yes, even if you overpay your total estimated taxes for the year, both the IRS and the California FTB may impose late payment penalties if any of your quarterly estimated payments (1040-ES for federal or 540-ES for California) are made after the scheduled due dates. Here's how it works:

IRS (Federal 1040-ES)

• What triggers the penalty: Payments made after the deadlines for each quarterly installment (April 15, June 15, September 15, and January 15).
• How it's calculated: IRS Form 2210 is used to compute penalties based on the shortfall and number of days late. Interest is applied daily using the IRS underpayment rate, which is the federal short-term rate + 3% (currently ~8% annually as of 2025).
• Tax Code: IRC §6654 governs this. Penalties are treated as interest, not a fixed fee.
• When it’s imposed: Not automatically deducted, it's calculated and applied when you file your tax return.
• Waiver options: You can request a waiver of the penalty on Form 2210 if the late payment was due to a reasonable cause (like disaster, disability, retirement, etc.).

California (540-ES)

• What triggers the penalty: Similar rules, late or insufficient quarterly payments result in an underpayment penalty.
• How it's calculated: FTB Form 5805 is used. California uses its own underpayment interest rate (currently also around 8% annually, adjusted periodically).
• Tax Code Reference: California Revenue and Taxation Code §19136.
• When imposed: The penalty is determined when filing your CA return, not deducted from the estimated payment itself.

Key Points

• Each quarter is treated separately. Being late on just Q2 (June 15) triggers a penalty for that installment, regardless of overpayment in other quarters.
• No fixed fee: Penalty is interest-based, not a flat dollar amount.
• Safe Harbor Rule: You can avoid penalties if you pay:
100% of your prior year tax (or 110% if AGI > $150K), or90% of the current year’s tax liability, evenly through the year.
• 100% of your prior year tax (or 110% if AGI > $150K), or
• 90% of the current year’s tax liability, evenly through the year.

• 100% of your prior year tax (or 110% if AGI > $150K), or
• 90% of the current year’s tax liability, evenly through the year.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Jason Malabute · Answer

If you pay your estimated taxes late, even if you end up overpaying for the year, the IRS or FTB can still charge you a small interest-based penalty. It’s calculated daily, so if you’re only a little late, it’s usually just a few dollars.

Jason Malabute · Answer

That’s a really common point of confusion—even the IRS and California’s FTB aren’t always great at explaining it. If you make an estimated tax payment after the deadline, you can still get charged a small penalty, even if you end up paying more than enough for the year. The penalty is interest-based and calculated daily, so if you’re only a bit late, it’s typically just a small amount.

Paul Fogarty · Answer

in other words, if the interest rate is 8% (annualized), for example, then 8% of what?

Paul Fogarty · Answer

Thank you Kyle, Dylan and Ashish!

I think I have the answer I need with one exception:

What dollar amount is the IRS or FTB using to calculate the late payment interest owed?  For example, are they taking 8% of the quarterly estimate payment I made (whether it's high or low) or the actual quarterly earnings for that quarter, or are they taking the total income for the year, dividing by 4 and then charging interest based on that average quarterly amount (multiplied by the number of days late)?

Dylan Brown · Answer

Great question – this one confuses a lot of people, and honestly, even the IRS and FTB don’t always explain it clearly. If you pay an estimated tax payment late, even if you end up overpaying for the year, they can still hit you with a small interest-based penalty. The good news is it’s calculated daily, so if you’re only a little late, it’s usually just a few bucks.

For example, paying $2,000 fifteen days late might cost you around $6 or $7 in interest – annoying, but not a big deal. You won’t see the penalty right away either; it just shows up when you file. As long as you’re not consistently late, it’s nothing to stress about.

Kyle Wheeler · Answer

Investor & Property Manager | St. Petersburg, FL

Great question—this one trips up a lot of people, and unfortunately, even IRS and FTB reps sometimes can’t give a clear answer on the spot.

You're right to distinguish this from an “underpayment” or “late filing” penalty. In your case, it’s technically an “estimated tax underpayment penalty,” even if your total payments exceed your final tax liability for the year. The IRS and FTB both care when the payments were made—not just the total.

Here’s how it generally works:

Timing Matters More Than Total

Even if you overpay for the year, making an installment late (like June 30 instead of June 15) can trigger a daily interest-based penalty on the late portion—just for the days it was late.

Federal (IRS – Form 1040-ES):

• The penalty is calculated on Form 2210 when you file your tax return.
• You won’t pay the penalty upfront—it’s typically calculated later and added to your return or billed separately.
• The rate is based on current interest rates (recently around 8% annually, calculated daily).

The penalty is calculated on Form 2210 when you file your tax return.

You won’t pay the penalty upfront—it’s typically calculated later and added to your return or billed separately.

The rate is based on current interest rates (recently around 8% annually, calculated daily).

Example:
If you owed $2,000 for Q2 and paid it 15 days late:

• Penalty ≈ $2,000 × 8% ÷ 365 × 15 days ≈ $6.58

Penalty ≈ $2,000 × 8% ÷ 365 × 15 days ≈ $6.58

Small, but technically there.

California (FTB – Form 540-ES):

• California does something similar using Form 5805.
• Their penalty rate is often even higher than the IRS (recently ~10%+).
• You’ll typically see this when you file your CA return, unless you calculate it in advance.

California does something similar using Form 5805.

Their penalty rate is often even higher than the IRS (recently ~10%+).

You’ll typically see this when you file your CA return, unless you calculate it in advance.

Good to Know:

• You don’t prepay this penalty—it’s billed after the fact.
• It’s not deducted from your estimated payment.
• If you had a legitimate reason for missing the date (illness, disaster, etc.), you can sometimes request a waiver.

You don’t prepay this penalty—it’s billed after the fact.

It’s not deducted from your estimated payment.

If you had a legitimate reason for missing the date (illness, disaster, etc.), you can sometimes request a waiver.

Let me know if you want a quick spreadsheet to estimate the penalty based on the payment date and amount—I’ve built one to keep track of my own quarterly timing. It’s annoying how small delays can trigger paperwork, but you’re smart to get ahead of it.

Thanks, Kyle Wheeler

Late Penalties for 1040ES and 540ES?

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