Question

For 2019, Peggy received a form 1098-E from her federal student loan that showed that she paid $4,600 in interest. Her W-2 from her employer shows 78,750 in box 1 and $6,200 in box 2. If these are the only items of income and expense for 2019, what will be Peggy’s 1040 show when she files her return using the single filing status?

Humphrey was very busy in 2020 and forgot to file his taxes or file an extension by July 15, 2020. When he got around to filing his tax return on September 28th, he found that he owed $1,727. How much will Humphrey owe in penalties in addition to the $1,727 for his failure to file and pay on time?

Answer 1

Ans-1

The Form 1040 will show as hereunder for Peggy

Ans-2

Assuming Humphrey is a calendar year filer the following are the date lines for him:

Fililng Return - 15th April,2020

Tax Payments - 15th March , 2020

Penalty Late Payment:

Non Payment of tax

0.5% of amount of tax for every month of delay.

Amount due is $ 1727 and delay is of 6months 13 days (15th Mar - 28th September) .For calculation convinience 13 days taken as half month

Penalty = 1727 * 0.5% * 6.5 = $ 56

Penalty Late Filing:

5% of tax due for every month of delay maximum to 25% of tax due

25% of Tax due for Humphrey = 1727 * 25% = 432

Penalty @ 5% for 5.5 months (15th April to 28th Sep) = 1727 * 5% * 5.5 = 475

For calculation convinience 13 days taken as half month

So here it will be limited to $ 432

TOTAL PENALTY WILL BE:

For Late Payment = $ 56

For Late Filing = $ 432

Total = $ 488