Tax Penalty Calculator

Step-by-Step Guide to Using the Tax Penalty Calculator

The Tax Penalty Calculator is a tool designed to help you calculate penalties and interest charges if you have missed your tax payment due date. Follow the guide below to ensure accurate calculations.

Step 1: Enter the Basic Information

Begin by providing the essential details for the calculation. You will find input fields that require the following information:

• Original Tax Due ($): Enter the original tax amount that was due. This should be a non-negative number.
• Original Due Date: Select the date when the tax payment was initially due. This is a mandatory field.
• Actual Payment Date: Enter the date when you actually made the payment. This must be provided to calculate the delay.

Step 2: Choose the Penalty Type

The calculator allows you to specify the type of penalty incurred. Select one from the dropdown menu:

• Failure to File: Choose this if you didn’t file your taxes on time.
• Failure to Pay: Choose this if you didn’t pay your taxes on time.
• Both Failures: Select this option if both filing and payment were delayed.

Ensure you select the correct penalty type to get an accurate calculation.

Step 3: Review the Results

Once all the inputs are provided, the tool will calculate and display the following results:

• Months Late: Calculated by the formula ceil((paymentDate – dueDateMissed) / 30.44) to convert the delay into full months.
• Failure to File Penalty: If applicable, this is the penalty for late filing, calculated as the lesser of 25% of the original tax due or 5% of the tax due for each month late.
• Failure to Pay Penalty: If applicable, this is the penalty for late payment, calculated as the lesser of 25% of the original tax due or 0.5% of the tax due for each month late.
• Interest Charges: Interest is calculated at 5% of the original tax due for each month late.
• Total Penalties and Interest: The tool sums the penalties and interest charges to provide the total extra cost incurred.
• Total Amount Due: This is the sum of the original tax due and all calculated penalties and interest, giving you the total amount to settle.

By following these steps, the Tax Penalty Calculator will provide you with a comprehensive understanding of your financial obligations due to late tax payment or filing.