Projected penalties

[RRoman808]

TLDR due to a mistake I made, I owed $693.05 in taxes on my return last year. I did a short term payment plan with the expectation of coming into much needed money to be able to pay this off my the 27th of this month. That doesn't look to be happening. Upon doing the math, I'm projecting to, worse case, end up owing 730 and change after penalities and such if I'm to wait till my next tax return. Would that be correct? 

Using chatgpt, this is what I got> 

Key Assumptions:

1. IRS Interest Rate: Generally, the IRS charges interest at the federal short-term rate plus 3%. For 2024, this rate is typically around 7% annual interest (or 0.583% per month).
2. Failure-to-Pay Penalty: This is 0.5% of the unpaid tax per month, capped at 25% of the balance.

Timeframe:

• From December 27, 2024, to April 15, 2025, is roughly 3.5 months.

Calculation:

1. Failure-to-Pay Penalty:
   Monthly penalty = 693.05×0.005=3.47693.05 \times 0.005 = 3.47693.05×0.005=3.47
   Over 3.5 months: 3.47×3.5=12.153.47 \times 3.5 = 12.153.47×3.5=12.15

2. Interest on Debt:
   Monthly interest = 693.05×0.00583=4.04693.05 \times 0.00583 = 4.04693.05×0.00583=4.04
   Over 3.5 months:

   • Interest is compounded, so we calculate it incrementally:
     693.05×(1+0.00583)3.5≈708.57693.05 \times (1 + 0.00583)^{3.5} \approx 708.57693.05×(1+0.00583)3.5≈708.57
   • Total interest = 708.57−693.05=15.52708.57 - 693.05 = 15.52708.57−693.05=15.52

3. Total Owed:
   Principal + penalties + interest = 693.05+12.15+15.52=720.72693.05 + 12.15 + 15.52 = 720.72693.05+12.15+15.52=720.72.

Final Estimate:

If you wait until April 2025 to pay, you will owe approximately $720.72 to the IRS.