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sam992116
Returning Member

Late Payment Penality with Extension

I did file for extension for year 2019 Taxes.

 

I did NOT owe any taxes Last year. Tax liability was $0.

 

This year amount owed is $500

 

 

Total tax liability is less than $1,000

Did not owe any taxes for the previous year.

 

There 3 issues

Late filing Penalty (does NOT apply to me as I filed for an extension)

Late Payment Penalty. Need to Clarify as amount owed is less than $1000

Interest (compounded daily)

 

When liability is less $1000, is it automatic that I will Not be charged Late Payment Penality or it depends ON IRS?

 

I did check online daily compounded interest rate (3% + Fed rate (0.25%) = 3.25%) for $500 for 90 days will be $4.

 

OR Should I mail, $500 + $4 (interest rate) + $7.5 (0.5% late payment penality, $2.5 for each month?

 

Or should I mail $500 + $4 (interest rate)  and wait for any letter which I may get for possible late payment Penality?

 

5 Replies
Anonymous
Not applicable

Late Payment Penality with Extension

late payment penalty applies since it was due 7/15/2020.  the amount doesn't matter.  the $1,000 your thinking about is for underpayment of estimated tax  - no penalty if the rules are met but any balance due even under $1,000 was due 7/15/2020. 

 

there is a late payment penalty of 1/2 % per month or fraction thereof + the interest.  let the IRS bill you. generally, nobody gets it right but send in $512 and then the IRS should leave you alone. assuming the rate is correct you are doing it wrong

 

+3.25%/365 = daily rate compounded for 92 days (to 10/15/2020). (would still come out to about $4

VolvoGirl
Level 15

Late Payment Penality with Extension

Even if you got an extension to file  any payment was still due July 15.

 

You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

 

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

 

If you have the desktop program you can switch to Forms Mode (click forms in the upper right (left for Mac)) and open the 2210 form.  If the 2210 doesn't show up in the left column, click on Open Forms at the top of the left column.  Type 2210 in the search box and open the 2210 form.  Check box C to let the IRS calculate it.

 

 

ps....I had a refund once and still had a penalty for not paying in evenly during the year.

sam992116
Returning Member

Late Payment Penality with Extension

Thank you both.

 

I did ran other tax situation and under payment penalty. Good news is TT is telling me I don't have underpayment penalty!

 

How do I pay $4 interest accrued on late TAX payment due? I mean to ask which form and box to check?

 

Form 1040 Line 23 is Amount you owe

and Line 24 is Estimated Tax Penalty

 

Option 1. 

Change Line 23 on 1040 Amount owe as $504 ($500 + $4 interest), BUT  it might confuse e-filing Computer Matching numbers

Send $504 debt withdraw

 

Option 2

 

Keep Line 23 as $500

Line 24 = enter $4 even though it is interest rate but I am adding it in Penalty Box

 

Option 3

 

Keep Line 23 as $500 which is correct amount

Line 24 Blank

But Send $504 (it is easy if I send check or do it in Treasury direct website)

 

How would I handle this in Debt withdraw? I never been in this situation. Not sure in debt withdraw one has to enter amount or IRS will take out Amount owe to them listed in Line 23 on form 1040.

 

By the way where do you enter debt withdraw from Bank info in TT?

sam992116
Returning Member

Late Payment Penality with Extension

Estimated Taxes for year 2020

 

How much would be my estimated tax payment for 2020? 110% of 2019 tax due 500 is $555?

 

So far I have NOT send any thing. Should I send $555 for whole year once or don't even bother as it is less than $1000.

 

 

Anonymous
Not applicable

Late Payment Penality with Extension

you do not have an underpayment penalty. an underpayment penalty is when you do not pay in enough taxes by the due date of the return. this is completely different from a late payment penalty which applies to any payment due which is paid after the due date of the return. you have a late payment penalty because the amount due was supposed to be paid 7/15/2020.   the late payment penalty is 1/2% a month.  as an option don't pay the $4 just the $500 and see if the IRS bills you. 

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