Penalty and interest calculator?

[Possi]

Is there a penalty and interest calculator anywhere on the IRS website? Or anywhere else?

When my client is doing a 2011 tax return, and owes $1039.00, there should be a way to add the penalty and interest in rather than wait for the Love Letter. I'm sure I am missing something.

[DaveinTexas]

Drake Software and Tax Interest

I haven't found a free calculator anywhere. But I use Drake to figure my client's penalties/interest and/or Tax Interest software (about $150 for Tax Interest). Both are accurate but I really like Tax Interest software because it provides a nice detailed report you can use to refute incorrect IRS calculations.

Here is the site for the software: http://www.timevalue.com/products/ta.../overview.aspx

My calculations say your client will owe $1,499.77 (with FTF and FTP penalties and interest calculated to today's date). Please see attached a copy of the report I just made (just for you) And, please, check the calculations yourself before telling the client.

To renew your subscription, it costs around $99 but truth be told, I just manually enter the interest rate %'s in the software and they haven't changed in a few years anyway.

[Possi]

Wow! Thanks!

Wow, thanks so much! I'll look into that software. I love being able to see what is coming down the pike as much as my clients do, and this is a real eye-opener!

[DaveinTexas]

You bet!

Wow, thanks so much! I'll look into that software. I love being able to see what is coming down the pike as much as my clients do, and this is a real eye-opener!

I do like that software, it literally took me like 30 seconds to do that calculation AND, you might even be able to charge the client for the calculation ($5 maybe)....for your time and effort!

[Possi]

Great tool

Yes, that is a great tool. I would charge them a modest fee, yes. Not enough to pay for the software, as I don't have that many, but I'm sure going to get it. I'm doing 2012 taxes now, hoping they don't owe.

[JohnH]

You can use 25% of the original amount for FTF, and then add 9% per year for the FTP penalty & interest combined (averaged out monthly for the odd months). That isn't as accurate as Dave's software, but pretty close. I don't think you would want to lock yourself into a figure with the client anyhow. I'd tell them it will probably add up to about $1,500 - $1,600, and to send me a copy of the bill when they get it so I can check IRS's figures. If you give them a figure that looks like it's calculated to the penny, they're likely going to start complaining if the bill is even a little bit over what you said.

Besides, if they didn't bother to file, surely they aren't concerned about exact figures at this late date.

[S T]

Dave - New to Drake Software, and I have tried, but not be able to accomplish all of the Late File, and/or Late Pay, and Interest for Federal

Could you post on the Drake Board and how?

What about State returns? Having some difficulty on the State Issues.

John H thanks also for your "calculation"

Sandy

[DaveinTexas]

I haven't found a program that calculates the States

Dave - New to Drake Software, and I have tried, but not be able to accomplish all of the Late File, and/or Late Pay, and Interest for Federal

Could you post on the Drake Board and how?

What about State returns? Having some difficulty on the State Issues.

John H thanks also for your "calculation"

Sandy

For the P&I to calculate correctly, you have to play with the LATE input screen a bit. Also, to calculate the FTF penalty, make sure the Form 4868 screen is not filled out. Or if the client did file an extension, just enter "0" in the FTF field on the LATE screen.

If you are referring to returns you are preparing in a previous version of Drake (2012 and prior), you may be missing a key component (the % rates for quarters during those previous years). You have to input the APR for each quarter by going to Setup, Options, Optional Items on Return. This is the screen where you input the previous quarter interest rates; what a pain, right?

Then, you simply go to the LATE screen and check the box, "Calculate penalties and interest on this return" (Top right of screen). Then just enter the date the return will be filed or was filed. For returns I mail, I usually add about a month to allow time to process. The Due Date of the return should be automatic (red equal sign) as well as the interest. This could be a more user friendly screen but its not bad for a free calculation. I hope that helps, play with it and make sure on the Penalty page (View Screen) that all quarters are calculating the interest at the applicable rates; this backfires on me sometimes.

[S T]

Thanks Dave,

That info will help for the Drake Software, as I am still on the learning curve on the Drake Software, it seemed to be more automatic from my prior Software that I was with for about 14 years!

I do like to calculate the penalties and interest, and yes I agree, I always add at least a month in the calculations for payment and processing time.

Sandy

[Possi]

Great information

You can use 25% of the original amount for FTF, and then add 9% per year for the FTP penalty & interest combined (averaged out monthly for the odd months). That isn't as accurate as Dave's software, but pretty close. I don't think you would want to lock yourself into a figure with the client anyhow. I'd tell them it will probably add up to about $1,500 - $1,600, and to send me a copy of the bill when they get it so I can check IRS's figures. If you give them a figure that looks like it's calculated to the penny, they're likely going to start complaining if the bill is even a little bit over what you said.

Besides, if they didn't bother to file, surely they aren't concerned about exact figures at this late date.

Thanks for that information. That software looks pretty interesting, though. Now, if it only did the state!

Yes, you are right about not giving them a calculated figure. They whine enough as it is.

These new clients in the off season are a strange bunch, aren't they? They are the ones who don't file, and don't care... until they are paying you to do their tax return. They want to see every single deduction that won't matter anyway because they don't itemize. And they don't get information to you until 3 days before they close on their new home.

If I didn't have to pay my own health insurance, I wouldn't take these clients. But most of the time, they turn out to be blessings I might have missed.

One more thing: I want him to send in an overpayment to cover most of the I&P. Does he need to designate any of the payment as such, or just send the overpayment in with the paper return?

[JohnH]

No need to designate anything.
They have their rules on how to apply the payments, and at the end of the day it all has to be paid.

Have him send a BIG overpayment.
He will get a check back after it's processed.
Then tell him to brag to his friends about the refund you got him, even on a late-filed return.

[Possi]

thanks!

If I had a "like" button, I'd push it! Thanks!

[Justataxguy]

I haven't found a program that calculates the States

I don't know about other states but NY does have a state tax P & I calculator on their tax website.

[Possi]

Got it!

I haven't found a free calculator anywhere. But I use Drake to figure my client's penalties/interest and/or Tax Interest software (about $150 for Tax Interest). Both are accurate but I really like Tax Interest software because it provides a nice detailed report you can use to refute incorrect IRS calculations.

Here is the site for the software: http://www.timevalue.com/products/ta.../overview.aspx

My calculations say your client will owe $1,499.77 (with FTF and FTP penalties and interest calculated to today's date). Please see attached a copy of the report I just made (just for you) And, please, check the calculations yourself before telling the client.

To renew your subscription, it costs around $99 but truth be told, I just manually enter the interest rate %'s in the software and they haven't changed in a few years anyway.

I ordered the software by phone today. I have so many coming in this week, who owe, and I like being able to give them a ball park figure.

I called and spoke to someone, asking for any promotions or discounts that might be available to a "lone ranger" like me. He gave me the Tax Interest software for $119 and one free annual update.

It's a good day. Thanks, Dave, for the website. I'll be in TX next week! Kerrville!

[JohnH]

Must be something about Texas.
I'll be there next week as well - Dallas.