Is it better to try to calculate penalties on late payment? or better for the IRS to bill you for them?

[davsea17]

If for example someone pays 1k of their 2k taxes by April 15th, but files an extension and pays the rest of their taxes due by October 15th when they file.

Is it better to try to calculate the penalties or let the IRS bill you for the penalties; also will this be a big increased audit risk to pay late and let the IRS bill you, or is this a pretty common thing where people pay late or owe penalties and things and get automatically billed?

Thanks!

[tagteam · Accepted solution]

You might be better off initially trying to calculate penalties and interest yourself since it could very well take the IRS months (perhaps longer) to get around to calculating any penalties and interest due (during which time interest would be accruing).

[Critter-3]

The TT program will calculate an estimated underpayment penalty but only the IRS/state can bill you for the actual underpayment penalty + interest  +  a possible failure to file penalty if you don't file timely.  Don't try to calculate it yourself.  The penalty/interest calculations start when they get your payment so paying online at the IRS or STATE websites is the best way to pay to stop the bleeding.