O/T IRS Advice needed

OK, I know that if you owe more than $1000 tax when you file April 15 that there is a penalty. My questiom, how much penalty?...and do you pay the penalty without the IRS billing you for it? I've read most of the 435 page tax form and "no find" that info.

Call the IRS. I'm not kidding. They're there to help.

Why would there be a penalty? Would it be because you didn't withhold enough? Seems that the taxes are due the 15th and that would be good enough.

Are you talking a straight 1040 or are you talking schedule C,F or other where quarterly estimates are paid.

I agree about calling the IRS, 800-829-1040 for individuals and 800-829-4933 for business and specialty.

Why is there a penalty?

--->Paul

Why on earth would you ask us this question?

Call the IRS phone number, it should be in your phone book. They will give you the expert answer. And...don't ask them how to set up a corn planter or how to fix a combine.

There are some cases where you are not liable for a penalty, such as, if your withholdings/estimates were equal to the prior year.

My CPA says his penalty calculations never are what the IRS figures. He just uses the formula, and lets them bill or credit for the difference.

According to the 1040 instructions, the penalty is calculated on Form 2210. Download the instructions for Form 2210 from irs.gov. I did, and there is no straight answer. The penalty depends on whether or not you paid estimated tax, and there are multiple ways to calculate the penalty. I suggest that you follow the recommendation of the 1040 instructions to let the IRS calculate the penalty, and make sure that in 2009 you either increase your estimated tax payments or increase your withholding to avoid paying the penalty next year.

You can ask for an extension until August 15th,and get it maybe if you use an accountant,but you will have to pay a penalty maybe.Just any time after the 15th of April that you have the money to pay the tax,pay it,and it reduces the penalty.
Now you would be better off asking an accountant about this stuff.The IRS from my experience with them answer wrong sometimes.Usually it is a difference between someone who answers the phone and a higher up IRS person.The people answering the phone might get you an idea of what you want to know,but if you are finding yourself in over your head,about the only thing that will help is an accountant,let him deal with the IRS,and what will usually happen is you will save money,plus things you dont know you can do,an accountant can tell you.IRS might know this stuff,but unless you ask,I doubt if they will tell you.They might,but dont count on who you call on the phone even knowing about it.
Every time I used an accountant he saved me lots more than a tax preparer,but trucking has a lot of unique things to it like road use tax,fuel tax,repairs,maintenance,proper depreciation schedules,and many other things.I had my hands full driving and keeping the truck going,for $250.00 a year,an accountant saved me lots of stress and money,and did a much better job with my taxes than tax preparers I used the first couple of years.The way things got for me the accountant was the difference between making decent wages or quitting.With all of the nonsense in the past few years especially with high fuel prices,every bit a person can bring home helps.

You are required to file a quarterly estimate(money). The last estimate(money) is due Janurary 15. The first is due April 15 for 2009. If you did file quarterly estimates(money) and still owe taxes and your estimates filed were equal to last year or more, you do not owe a penalty. If you paid less estimate than last year and owe taxes, there is a penality. Buy a turbotax program. It will figure your taxes as well as any penalty. The program will also figure your quarterly estimates for this year.

I suggest you call the IRS for a answer but if you really want a tractor board answer here goes............


Look in the instructions for form 1040 line 76 on page 65. It tells you to use form 2210 or (2210F for farmers) to figure your penalty. If you want you can just skip the penalty and the IRS will bill you for it with no extra penalty or interest.

I knew this answer because I also owed a penalty this year because I did not pay enough tax to cover the loss of a couple of my kids dropping off and going on their own.
I got lucky though because my penalty was waived because I did pre pay 100% of the amount my tax from last year was.


For those that asked "Why a penalty"
Income tax is a pay as you go system. You either have to have payroll deductions every week in the amount of your tax or pay quarterly if self employed. You can not wait till April 15 and pay all of last years tax. The feds do give you a $1000 or 10% of total tax owed leeway.

25% if you don't file, I know from many years ago.
Walt

For farmers???? Pay by the last day of Feb, & there is no penalty. We always have different deadlines than the rest of the world - this year they gave some institutions until Feb 15th to mail off 1099s, really can mess us up! No one considers the deadlines of others....

--->Paul

Exactly; filed a schedule F, in addition to all those others, for better than 40 years. I'd get a notice occasionally that I needed to pay quarterly; never did and never paid (or owed) a penalty. Like so many other things discussed on these forums, there's no 'one size fits all'.

Yes farmers do have different rules to go by.
I think fishermen also have differant rules.

Just use the Democratic version of Turbo Tax and you won't have any worries!! LOL!! Charles

If you paid at least as much tax (through withholding and quarterly estimated payments) as the total tax the previous year, AND you file a return or extension by April 15th, there is no penalty even if you owe a bunch this year.

As long as you file by April 15th, or file an extension and file your 1040 by October 15th, the penalty is fairly small and amounts to about 5% annual interest on the unpaid amount, calculated on a daily basis until paid. So you are probably looking at $50 or so. Just let the IRS figure the penalty, they'll send you a bill.

It's the "failure to file" penalty that's expensive -- 25% of the tax due, then the "failure to pay" gets added on to that.

In our case we owe $1222.00 and the fine is $32.00. We use Turbo Tax on line for our Tax buisness. We did not pay attention and under paid thus the deficiency in payment and the fine.Bummer.JC

Not true.

I regularly pay over $1,000 when filing because my withholdings were less than owed and I've never paid a penalty. I've been paying for 40 yrs. What's important is to pay at least as much tax as the year before.

I use turbo tax and recommend it.