[ac]

Marcy Mason, an individual calendar-year taxpayer, has a balance due on her Year 1 individual income tax return of $2,200. The total tax liability on her Year 1 return was $18,000. Assuming that Marcy does not show reasonable cause for any late filing or late payment of the tax due on her return.

On April 15, Year 2, Marcy filed a six-month extension of time to file her Year 1 return. She filed her Year 1 return and paid the tax due on
October 10, Year 2.

Answer: $2,200 Underpayment × 0.005 Penalty rate × Months (including partial months) tax due was not paid = $2,200 × 0.005 × 6 months = $66

Why is the answer $66? Shouldn’t it be $77?

$2,200 Underpayment × 0.005 Penalty rate × 7 Months (Apr+May+Jun+Jul+Aug+Sept+Oct) = $77 ?

[RobOh]

It is really only 6 months, not 7 months. See below:
1. 4/15 to 5/14
2. 5/15 to 6/14
3. 6/15 to 7/14
4. 7/15 to 8/14
5. 8/15 to 9/14
6. 9/15 to 10/10

[ac]

Thanks for the breakdown – really helps 🙂

[Author]

Replies