Question

Kevin’s 2019 tax return was due on April 15, 2020, but he did not file it until May 13, 2020. An Extension was not filed. The tax due on the tax return when filed was $6,500. In 2019, Kevin paid in $12,000 through withholding. His 2018 tax liability was $11,500. Kevin’s AGI for 2019 is less than $150,000. How much penalty will Kevin have to pay (disregard interest)?

Answer 1

First of all to identify Penalty of Income tax we will identify below things and keep in Mind below things

Original Due date is 15th April'20, Return was filed on 13th May 2020

Tax due was USD 6500, Since we have been asked for only penalty It will no matter how much tax liability he had on 2019,

Penalty is calculated on is usually 5% of the tax owed for each month or part of a month, In this case penaly return was filed on 13th May, So we will have to pay penalty for 2 months i.e. for April and May which will be 10%, Hence total penalty will be 10% of USD 6500= USD 650