Joanne filed her unextended 2020 tax return on September 14, 2021, paying the $5,000 amount due at that time. Joanne has noreasonable cause for failing tofile the return by April 15 or for failing topay the tax that was due on April 15, 2021. Compute the failure-to-file penalty.
A)$250
B)$1,250
C)$1,125
D)$1,000

Question

Quizplus · Accepted Answer

The failure-to-file penalty is generally 5% of the unpaid taxes for each month or part of a month that a tax return is late, up to a maximum of 25%. Joanne filed her return 5 months late (from April 15 to September 14), so the penalty would be 5% * 5 months = 25% of the unpaid taxes. Since she owed $5,000, the penalty is 25% * $5,000 = $1,125.

Joanne Filed Her Unextended 2020 Tax Return on September 14