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