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Author: edcosoft Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121568  
Subject: Re: Penalty!! Should I pay now? Date: 2/7/2000 9:35 AM
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I just ran Turbo Tax and discovered that I owe a fairly small
penalty for underpayment of my estimated taxes. Question -
would it make a difference in terms of the amount of the penalty
if I pay my taxes now, rather than wait until 4/15? I understand
that the calculation of the penalty amount is based on the # of
days of underpayment, but I can't figure out if that continues to
run until the tax is paid or until the end of the tax year (or 1/15).
thanks for any help. >>

The penalty is computed as interest from the due date of the
estimate to the date it's paid or 4/15, whichever is earlier, so the
sooner you pay the less the penalty.

Phil Marti
Tax Preparer


It depends on which installment was underpaid. It is presumed that the next payment reduces the underpayment so if you only had an underpayment on an early installment, and not on a later one, the time has already stopped running and paying anything now is redundant. On the other hand, if the penalty was for underpaying of the last instllment all you have to do is pay the amount of the underpayment to stop the penalty from increasing, and then pay the remaining tax due in April.
The penalty stops when you pay the underpayment or April 18, 2000 whichever is later. After 4/18/2000 is is a different penalty for non payment, or late payment of taxes.

Also, the IRS will figure the penalty for you, but you should do it yourself if you do the Schedule AI of Form 2210 to reduce the penalty (which may be possible). Ed
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