Penalty and Interest

Line
74
Step
11
Step Subject
Refund
Instruction Year
2014

74. PENALTY AND INTEREST.

Enter the penalty on line 74a, the interest on line 74b and the total on line 74.

74a. Penalty

10% Penalty for Failure to Timely File a Return:

If you do not file your return by the due date and at least 90% of the correct tax is not paid, you owe an additional 10% of the unpaid tax.

5% Penalty for Failure to Timely Pay the Tax Due:

If you file your return on time but do not pay at least 90% of the correct tax due, you owe an additional 5% of the unpaid tax.

You will never be subject to both the 5% and 10% penalties. The penalty will be the applicable 5% or 10%, but not a total of 15%.

If 90% of the correct tax due is paid by the due date, no penalty is due. To determine if 90% was paid, multiply line 54 of the IA 1040 by 90%. If the result is equal to or less than the amount on line 68 of the IA 1040, plus any payment made with a return filed by the due date, 90% of the tax has been paid timely and no penalty is due.

74b. Interest

Interest must be added to delinquent tax. Interest is added at a rate of 0.4% per month beginning on the due date of the return (April 30) and accrues each month until paid in full. Part of a month constitutes a whole month, so if you pay the tax on June 3, you are late for May and June for a total interest rate of 0.8% (2 x 0.4%).

Go to Line 73

Go to Line 75