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    #1

    Payment Of Taxes

    Taxpayer filed an extension and now is filing and paying taxes. Taxpayer owes about $20,000.00. and form 2210 has been filed. What kind of interest or penalty will he owe for not sending in the 20,000.00 with his extension

    where could I find info on this..
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    #2
    About 14% APR

    Assuming the client owes no estimated tax penalty, you can use a figure of about 14% APR (or 1.17% per month) to guesstimate the total penalty & interest. This is comprised of interest at about 8% APR plus a Failure to Pay penalty of about 1/2 of 1% per month.

    I've found this to be a pretty reliable formula, although I haven't tested it recently. I'm guesing your client owes about $1,400 in P&I at this point, assuming he pays the full amount by Oct 15. Otherwise, he's racking up about $234 per month of additional P&I, provided he files & doesn't expose himself to the 5% per month FTF penalty.
    Last edited by JohnH; 10-11-2007, 10:59 AM.
    "The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith

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      #3
      Penalties & interest

      What Tax Program do you use? There should be a form on there for this calculation.
      The Interest rate is 8% for the period April 17 throught Sept. 30.

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      This message board allows participants to freely exchange ideas and opinions on areas concerning taxes. The comments posted are the opinions of participants and not that of Tax Materials, Inc. We make no claim as to the accuracy of the information and will not be held liable for any damages caused by using such information. Tax Materials, Inc. reserves the right to delete or modify inappropriate postings.

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