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Level 3
posted Feb 26, 2021 12:33:38 PM

Do I report state underpayment penalty and interest?

I chose to pay 2019 CA underpayment penalty after filing the taxes, so I ended up paying the penalty and interest. Do I report this on both 2020 Federal and State taxes, if so, where? Thanks. 

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1 Best answer
Expert Alumni
Feb 26, 2021 1:05:29 PM

Federal taxes, penalties, and interest paid for a prior year are not deductible.   State taxes paid for a prior year are deductible on your Federal return in the year paid, but only the taxes. Penalties and interest are not deductible.   For help with CA penalties, see Help with Penalties under Common penalties and fees.

 

If you have reasonable cause, California may waive penalties. You may file a reasonable cause - claim for refund to request that we waive a penalty for reasonable cause.

 

 

1 Replies
Expert Alumni
Feb 26, 2021 1:05:29 PM

Federal taxes, penalties, and interest paid for a prior year are not deductible.   State taxes paid for a prior year are deductible on your Federal return in the year paid, but only the taxes. Penalties and interest are not deductible.   For help with CA penalties, see Help with Penalties under Common penalties and fees.

 

If you have reasonable cause, California may waive penalties. You may file a reasonable cause - claim for refund to request that we waive a penalty for reasonable cause.