Keyword: Penalty for UnderpayPenalty for Underpayment "> <meta name="Target" content="Penalty for Underpayment"> <meta name="Keyword" content="Penalty for Underpayment"> <meta name="Author" content="UncleFed.com"> <link rel="stylesheet" href="/Resources/css/ufsitestyle.css"> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> <meta name="generator" content="Companion 4.0.5"> <script language="JAVASCRIPT" type="text/javascript" src="/Resources/js/loadmenus.js"></script> <script language="JavaScript1.2" type="text/javascript" src="/Resources/navigation/mm_menu.js"></script> </head> <body bgcolor="#FFFFFF" background="/Resources/files/back_white.jpg" text="#0F2864" link="#990000" vlink="#808080" alink="#990000" leftmargin="0" topmargin="0" marginwidth="0" marginheight="0"> <table width="768" border="0" align="center" cellpadding="0" cellspacing="0"> <tr> <td height="5" colspan="2"><img src="/Resources/files/spacer.gif" height="5"></td> </tr> <tr> <td height="5" colspan="2" background="/Resources/files/back_red.jpg" bgcolor="#999999"><img src="/Resources/files/spacer.gif" height="5"></td> </tr> <tr valign="top"> <td height="60" colspan="2" background="/Resources/files/uf_banner_042803.jpg"><table width="100%" height="60" border="0" cellpadding="5" cellspacing="0"> <tr> <td width="400" valign="top"><img src="/Resources/files/spacer.gif" width="400" height="50"></td> <td valign="middle" class="body4-b16"><div align="right">Tax Help Archives </div></td> </tr> </table></td> </tr> <tr valign="top"> <td height="24" colspan="2"> <script language="JavaScript1.2">mmLoadMenus();</script> <img name="navigation" src="/Resources/navigation/navigation.gif" width="768" height="20" border="0" usemap="#m_navigation" alt=""> <map name="m_navigation"> <area shape="rect" coords="14,2,136,20" href="/index.html" alt="" > <area shape="rect" coords="172,2,290,22" href="#" alt="" onMouseOut="MM_startTimeout();" onMouseOver="MM_showMenu(window.mm_menu_0520162241_0,170,22,null,'navigation');" > <area shape="rect" coords="316,2,453,22" href="#" alt="" onMouseOut="MM_startTimeout();" onMouseOver="MM_showMenu(window.mm_menu_0501162545_1,321,22,null,'navigation');" > <area shape="rect" coords="467,2,610,22" href="#" alt="" onMouseOut="MM_startTimeout();" onMouseOver="MM_showMenu(window.mm_menu_0501163416_4,470,22,null,'navigation');" > <area shape="rect" coords="642,2,743,22" href="#" alt="" onMouseOut="MM_startTimeout();" onMouseOver="MM_showMenu(window.mm_menu_0501165431_5,626,22,null,'navigation');" > </map> </td> </tr> <tr> <tr> <td width="618" valign="top"> <table width="100%" height="62" border="0" cellpadding="0" cellspacing="0"> <tr valign="top"> <td height="25" colspan="2" valign="middle" background="/Resources/files/back_blue.jpg" class="nav"><img src="/Resources/files/spacer.gif" width="1" height="25" align="absmiddle"> <a href="/index.html">Home</a> >  <a href="/TaxHelpArchives/index.html">Tax Help Archives</a> > <a href="/TaxHelpArchives/2005/index.html">2005</a> > <a href="index.html">2005 Tax Topics & FAQs</a> > FAQ - Keyword  </td> <td width="5" valign="middle" class="nav"><img src="/Resources/files/spacer.gif" width="5" height="100%"></td> </tr> <tr valign="top"> <td valign="top" colspan="2" align="center"><table class="main-body"><tr><td>  <div align="center"><table border="0" cellpadding="0" width="100%" cellspacing="1"> <tr> <td width="50%" class="body1">FAQ Keyword</td> <td width="50%" class="body1" align="right">2005 Tax Year</td> </tr> </table></div> <h3 class="page-title">Keyword: Penalty for Underpayment</h3> <div id="page-hr"></div> <p class="page-subtitle">This is archived information that pertains only to the 2005 Tax Year. If you<br> are looking for information for the current tax year, go to the <a href="/Tax-Help/index.html">Tax Prep Help Area</a>.</p> <div id="page-hr"></div> <div class=KonaBody> <strong>1.5 IRS Procedures: Collection Procedural Questions</strong> <div><span><strong>What kind of penalties and interest will I be charged for paying and filing my taxes late?</strong></span><p> <p>Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months. </p> <p>For current interest rates, go to <a href="/Tax-News/index.html">News Releases and Fact Sheets</a> and find the most recent Internal Revenue release entitled Quarterly Interest Rates. </p> <p>In addition, if you filed on time but didn't pay on time, you'll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent. However, you will not have to pay the penalty if you can show reasonable cause for the failure. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy. </p> <p>Beginning January 1, 2000, if you filed a timely return and are paying your tax pursuant to an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment agreement is in effect. </p> <p>If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%. The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax and any timely payments made with the return. After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid. Thus, the total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. Also, if your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100% of the tax required to be shown on the return. </p> <p>Also, refer to <a href="tc653.html">Tax Topic 653</a>, <i><em> IRS Notices and Bills and Penalty and Interest Charges.</em></i></p> </p> <div id="page-related"><span class="section-subtitle">References:</span><ul style="margin-left: +0.5in;"> <li><a href="tc653.html">Tax Topic 653</a>, <i><em>IRS notices and bills and penalty and interest charges</em></i></li> <li><a href="/Tax-News/index.html">News Releases and Fact Sheets</a></li> </ul> </p> </div><br> <div><span><strong>What is meant by "no tax liability" in the exceptions to the estimated tax penalty?</strong></span><p> <p>You do not have to pay estimated tax if you meet all three of the following conditions. </p> <p>1. You had no tax liability for the prior year.</p> <p>2. You were a U.S. citizen or resident for the whole year.</p> <p>3. Your prior tax year covered a 12-month period.</p> <p>You had no tax liability if your total tax was zero or you did not have to file an income tax return. </p> <p><b> Total tax .</b> Your total tax on <a href="/IRS-Forms/2005/f1040.pdf">Form 1040</a> (PDF) is the amount listed on the line labeled "total tax" reduced by the amount of earned income credit, additional child tax credit, and credits from <a href="/IRS-Forms/2005/f4136.pdf">Form 4136</a> (PDF) and <a href="/IRS-Forms/2005/f8885.pdf">Form 8885</a> (PDF). </p> <p>On <a href="/IRS-Forms/2005/f1040a.pdf">Form 1040A</a> (PDF), it is labeled "total tax" reduced by the amount of earned income credit and additional child tax credit. On <a href="/IRS-Forms/2005/f1040ez.pdf">Form 1040EZ</a> (PDF), it is the amount labeled "tax" reduced by the amount of earned income credit. </p> <p>For additional information on this topic refer to <a href="/IRS-Forms/2005/f1040es.pdf">Form 1040-ES</a> (PDF), <i><em> Estimated Tax for Individuals </em></i>, and <a href="/IRS-Forms/2005/p505.pdf">Publication 505</a>, <i><em> Tax Withholding and Estimated Tax </em></i>. </p> </p> <div id="page-related"><span class="section-subtitle">References:</span><ul style="margin-left: +0.5in;"> <li><a href="/IRS-Forms/2005/f1040es.pdf">Form 1040-ES</a> (PDF), <i><em> Estimated Tax for Individuals </em></i></li> <li><a href="/IRS-Forms/2005/p505.pdf">Publication 505</a>, <i><em> Tax Withholding and Estimated Tax </em></i></li> </ul> </p> </div><br> </div>    <div id="page-hr"></div> <p align="center"><a href="faq-kw135.html">Previous</a> | <a href="faq_index.html">FAQ Index</a> | <a href="faq-kw137.html">Next</a></p> <div id="page-hr"></div> <p align="center"><a href="index.html">Tax Topics Index</a> | <a href="faq_index.html">FAQs Index</a></p> <p align="center"><a href="/TaxHelpArchives/2005/index.html">2005 Tax Help Archives</a> | <a href="/TaxHelpArchives/index.html">Tax Help Archives Main</a> | <a href="/index.html">Home</a></p>  <div id="page-hr"></div> <center><script type="text/javascript"></script> <script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js"> </script></center> <div id="page-hr"></div> <div id="copyright">© 2006, <a href="http://www.unclefed.com/index.html">UncleFed.com</a></div> </td></tr></table></td> <td width="5" valign="middle" class="nav"><img src="/Resources/files/spacer.gif" width="5" height="100%"></td> </tr> </table>  </td> <td width="150" valign="top" background="/Resources/files/back_red.jpg"><script src="/Resources/js/searchbox_front.js"></script><script src="/Resources/ads.js"></script></td> </tr> <tr> <td background="/Resources/files/back_red.jpg" height="5" colspan="2" bgcolor="#999999"><img src="/Resources/files/spacer.gif" height="5"></td> </tr> <tr> <td height="5" colspan="2"><img src="/Resources/files/spacer.gif" height="5"></td> </tr> </table>  <script type="text/javascript"> var dc_UnitID = 14; var dc_PublisherID = 8349; var dc_AdLinkColor = 'blue'; var dc_adprod='ADL'; </script> <script type="text/javascript" SRC="http://kona.kontera.com/javascript/lib/KonaLibInline.js"></script>  </body> </html>