I got a friend that has yet to file his taxes. He bought a house last year and got married so he figured the feds will owe him money and thus has not bothered since he has been busy.
His new bride asked me to look into helping her file the paperwork for them. I agreed and re-installed TurboTax and plugged in the numbers, ease enough. Yup the feds are going to give him back some money as is the state of IL (he works in IL). However he owes IN some money since no tax is taken out of his paycheck for his job in IL and the "credit" in paying IL taxes was not enough this year to offset his IN tax bill.
So this is where I'm confused since I've never filed late or owed the state **AFTER** the deadline.
Here is what the instruction book says for the penalty and interest.
He owes $247 so for the penalty it is...
$247 x .10 = 24.7 = $25
Now I'm a bit at a loss on the interest. It is a daily interest rate calculation? Weekly? monthly?
From this website I take it it is a daily fee.
Read more: Penalty for Filing Late Taxes in Indiana | eHow.com Penalty for Filing Late Taxes in Indiana | eHow.com
So Using this online tool I am getting an Cumulative Interest fee of $3.19
Daily Interest Calculator
That sounds too low for me. Doing it by hand I get this.
$247 * .09 (9%) = $22.23
Which to me implies that each day the interest is $22.23.
So between 04/19/2011 to say 06/10/2011 is 52 days.
So would I not then do $22.23 x 52 = $1155.96
Any ideas? Thanks!
His new bride asked me to look into helping her file the paperwork for them. I agreed and re-installed TurboTax and plugged in the numbers, ease enough. Yup the feds are going to give him back some money as is the state of IL (he works in IL). However he owes IN some money since no tax is taken out of his paycheck for his job in IL and the "credit" in paying IL taxes was not enough this year to offset his IN tax bill.
So this is where I'm confused since I've never filed late or owed the state **AFTER** the deadline.
Here is what the instruction book says for the penalty and interest.
Line 24 – Penalty
You will probably owe a penalty if your tax return is filed after the April
18, 2011, due date and you have an amount due. Penalty is 10 percent
(.10) of the amount due (line 23 minus line 20) or $5, whichever is
greater. Exception: No penalty will be due if you have:
• An extension of time to file;
• Are filing and paying the remaining tax due by the extended filing
due date and
• Have prepaid at least 90 percent of the amount due by April 18,
2011.
Line 25 – Interest
You will owe interest (even if you have a valid extension of time to file)
if your tax return is filed after the April 18, 2011, due date and you have
an amount due. Interest should be figured on the sum of line 23 minus
line 20. Contact the Department at (317) 232-2240 or visit our website
at DOR: Departmental Notices to get Departmental Notice #3 for the
current interest rate.
He owes $247 so for the penalty it is...
$247 x .10 = 24.7 = $25
Now I'm a bit at a loss on the interest. It is a daily interest rate calculation? Weekly? monthly?
From this website I take it it is a daily fee.
Interest Rate
- In addition to the 10 percent upfront penalty, an additional penalty is added to the tax payment if it is not paid immediately. This interest rate changes from year to year and is calculated by adding 2 percent to the state's investment yield. As of February 2011, the interest rate for underpayment of Indiana taxes is 9 percent. The total amount of interest you owe starts from the day the tax is overdue, until the day you actually pay the tax.
Read more: Penalty for Filing Late Taxes in Indiana | eHow.com Penalty for Filing Late Taxes in Indiana | eHow.com
So Using this online tool I am getting an Cumulative Interest fee of $3.19
Daily Interest Calculator
That sounds too low for me. Doing it by hand I get this.
$247 * .09 (9%) = $22.23
Which to me implies that each day the interest is $22.23.
So between 04/19/2011 to say 06/10/2011 is 52 days.
So would I not then do $22.23 x 52 = $1155.96
Any ideas? Thanks!