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New Member
posted Jun 13, 2024 8:03:12 PM

Can I deduct a tax penalty paid last year from my 2023 federal taxes? I underpaid by $14 and was penalized $443.75 with interest of $19.92

0 3 15604
3 Replies
Level 15
Jun 13, 2024 8:11:38 PM

No---federal tax and/or penalties you paid are not deductible.

Level 15
Jun 13, 2024 8:31:12 PM

the interest is also not deductible. 

Level 9
Jun 14, 2024 6:01:44 PM

There is a cap on the amount of penalty and interest that can be applied to an underpaid return.  If you really underpaid by $14 than the maximum penalty and interest would not exceed $3.50.

I believe that you underpaid by enough so that the $443.75 was taxes owed plus penalty and interest.  In any case the penalty and interest are not tax deductible.