Question

Joan filed her individual income tax return 5 months after it was due. She did not request an extension of time for filing. Along with her return, Joan remitted a check for $350, which was the balance of the taxes she owed with her return.

Disregarding interest, calculate the total penalties that Joan will be required to pay, assuming the failure to file was not fraudulent.

Answer 1

Ans: Generally a 5% of tax liability per month is applicable for failure to file per month and maximum upto 25% of tax owed, also 0.5% of tax liability per month is applicable for failure to pay per month, in combined it’s a maximum of 5% per month of tax liability for failure to file and failure to pay with maximum of 25% tax owed.

Since Joan Doesn’t file his tax return and pay taxes for 5 months , applicable penalty is 5% per month of tax owed for 5 months

$350 x 5% x 5 months = $87.50