John forgot to pay his $385 income tax on time. The IRS charged a penalty of 4% for the 3 days the money was late. Find the penalty that was paid. Use 365 day year.
+118608 John forgot to pay his $385 income tax on time. The IRS charged a penalty of 4% for the 3 days the money was late. Find the penalty that was paid. Use 365 day year.
I do not think that your answer is complete.
If he pays 4% then that is
0.04*385 = $15.40
BUT I suspect that is was supposed to be 4% per annum 4% p.a.
and then the penalty would be
3/365*0.04*38 = 0.0124931506849315 = 1 cent
Melody: A minor mistake:
[$385 x 4%] =$15.40 interest for 1 year.
[$15.40/365] x 3 days =0.1265....~13 cents.
So the answer is suppose to be $1.56. I think I figured it out. I=prt
I=(385)(0.04)(37/365) and when you multiply it all it ends up being $1.56.
+2440 In your question, you wrote 3 days not 37 days.
The question is brain dead, anyway. It’s inconsistent with the IRS tax laws.
A penalty assessed by the IRS is not a per diem adjusted annual interest rate.
Who wrote this brain-dead question? Does a retired Blarney Banker teach your class?
Here’s an overview of the IRS regulations.
If you owe tax and don’t file on time, according to IRS regulations, penalties are assessed and added to your bill. Penalties are in addition to BOTH the tax due and the interest on the past due tax. The total late–filing penalty is usually 5% of the tax owed for each month, or part of a month, that your return is late up to five months (25%). If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 or 100 percent of the tax owed.
Generally, interest is charged on any unpaid tax from the original due date of the return until the date of payment. The interest rate on unpaid Federal tax is determined and posted every three months. It is the federal short–term interest rate plus 3 percent. The interest is compounded daily.
Jan. 1, 2011 — Mar. 31, 2016 3%
Apr. 1, 2016 — Jan. 31, 2017 3.7%
Feb. 1, 2017 — Present 4.04%
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Mr. Blarney Banker this is a major oversight, a failure to notice, on your part.
It seems reasonable an investment banker would know basic tax law application. Of late, you’re a little out of the loop, but here are questions you may know the answer to:
Does the IRS tax Ramen Noodles?
Does the IRS allow you to deduct blarney as a casualty to embezzled income?
