topic Interest Assessed for Late Payment (2023 Individual Return) in After you file

Interest Assessed for Late Payment (2023 Individual Return)

Xtermy — Mon, 11 Nov 2024 07:47:52 GMT

Hello,

On 04/13/2024 I filed an electronic extension to file my 2023 return until 10/15/2024. I then electronically filed that return on 10/14/2024. I owed $2,588. I paid the entire amount with my return, via an electronic payment from my checking account.

When I filed the extension, I made a payment with it. In addition, I made an estimated payment in 2023. Unfortunately, these weren’t enough in order to cover my entire eventual balance. However, I made sure to claim both of these payments on my 2023 return. In addition, before I filed, I also made sure to check whether I owed any Estimated Payments penalty. I didn’t.

On 11/09/2024 I received a CP 14 notice, dated 11/04/2024. It showed that I have a balance due of $105.50, which is due by 11/25/2024. It’s for the interest that has accumulated on the $2,588 since 04/15/2024. I understand why the interest was assessed, and the IRS’s calculation of it seems correct to me. However, I have a couple of questions:

1) Going forward, is there a way to prevent this (other than to find more deductions or credits, or to overpay more in estimated payments)?

What I mean is, does TurboTax Desktop have a tool to check for how much interest I owe (similarly to the Estimated Payment penalty check tool), so that I can add this interest amount to my total payment amount at the time of filing the return, instead of waiting for the CP 14 notice?

2) Does TurboTax cover such a scenario in its money-back guarantee, which says that I won’t end up paying more than its calculated balance due (assuming that the data inputted was correct and complete)?

And, if so, how can I make a claim? (I tried finding an online contact method, but could only find the 1-800 phone number)

Thank you!

Re: Interest Assessed for Late Payment (2023 Individual Return)

Mike9241 — Mon, 11 Nov 2024 08:52:00 GMT

1) Going forward, is there a way to prevent this (other than to find more deductions or credits, or to overpay more in estimated payments)?

No. Turbotax does not compute interest on late payments. 100% of your tax is due 4/15 (or the next business day should 4/15 fall on a weekend or holiday) of the following year except in certain situations like disasters.

Interest on a late payment not due to a calculation error made by Turbotax is not covered

Re: Interest Assessed for Late Payment (2023 Individual Return)

Xtermy — Mon, 18 Nov 2024 05:13:21 GMT

Hello,

I really appreciate the reply and I understand the answer to both answers.

That being said, I'm interested (if you know), why a similar solution to the Estimated Payments penalty tool within TurboTax Desktop edition cannot also be duplicated for figuring out interest on late payments?

Based on the following article on your website, the quarterly interest rates seem to always be known in advance: What Are the IRS Interest Rates for Late Tax Payments or Refunds?

Therefore, why couldn't they be factored into the software itself (such as by means of a later update to it), and thus be added to the final amount due? Is this a software limitation, or is it simply company policy for whatever reason?

I'm genuinely interested in finding out. Not trying to be "smart" or difficult. This just seems to me like a very useful and beneficial tool to actually add to future additions of the software.

Thank you.