Gammyt, I don't really understand what you are asking. Are you saying that he didn't file as he should have last April, and is trying to do it now, 8 months late, and is wondering how much more it will cost him?

If he has an IRS tax booklet from last year, I think that there is a formula for calculating the interest and penalties. Also, if he goes to freefile.gov and connects with one of the tax preparation programs to fill out the return, they should calculate it too.

The interest rate changes quarterly. They do charge interest on the unpaid fines/penalties as well. So that part can't be guessed by me.

According to the IRS site, the penalty for not filing is 5% per month that the filing is overdue (5% of what he owed). After 2 months late, the minimun penalty is $100. (So, on $660, penalty right now of $264?)

Then they also levy a penalty of 0.5% per month for paying late. But they will give you a break if you have to pay both penalties! I am not sure how that would work: but with out the break it is another $26 or so.

There is also a penalty for diregarding IRS rules, and still another if they decide that he filled out the return fraudulently.

Many years ago, my soon to be ex-spouse worked for one night at a market then quit. I didn't know about it, and when I filled out our return that year, of course I omitted that one night's pay. But the IRS knew about it and hit me (by this time he was long gone) with penalties and interest way more than the amount of tax owed for those few dollars.

I wish him luck!

To clarify, my friend didn't file taxes last April, he thought he a refund coming as always. I have told him for years he was dumb, get the money and put it in the bank. He didn't listen.

Needing money he recently did his taxes that he should have done last April and found that he had to pay $660. He hasn't mailed the return because he doesn't have the $660.

He was told by someone that if he mails his return by December 15th with a check of $1300, he wont go to prison.

I told him to just send the $660 and the IRS will work with him for the rest. He asked how I knew that. I could only say that was what I heard. LOL

Does anyone know what he owes now?

raee says that the penalty is 5% for each month or part during which the return hasn't been filed on time. However, I don't think that's 5% of the $660 your friend owes -- rather, it's 5% of the total amount of tax your friend owes, including what has already been withheld.

You haven't said what your friend's total tax bill is, so I don't think it's possible to figure out what he owes. However, from April 15 to December 15 is 8 months, so I would think that you could take that total amount, whatever it is, take 47.7% of that, (5% compounded 8 times) and get a pretty good guess.

So, for example, if your total tax for the year is $20,000, I would guess that your friend now owes about $9,540, provided that the return is filed by December 15.

This is just a guess, and perhaps someone who knows more than I can say for sure. However, I am pretty certain that the penalty is based on the full amount of tax on the return, not just the part that is unpaid.

Have your friend mail the tax return in ASAP with no payment, partial payment or full payment of the taxes due. That will stop the failure to file penality from increasing. The IRS will calculate penalities and interest due and send him a bill for whatever he didn't pay.

He will most likely owe a late filing penalty (5% per month or part of a month of the taxes not paid by the due date of the return not to exceed 25%), a failure to pay penalty (.5% of the unpaid balance for each month or part of a month) and interest (rate varies by the quarter).

The information on penalities starts on page 20 of IRS Publication 17.

Here is a link that might be useful: Pub 17

Minimum penalty for filing over 60 days late is $135 or 100% of the unpaid taxes, whichever is less.

Thanks all, I printed this all out, including Publication 17 and brought it next door to him.

That was 9am Sunday morning, he let his dog out so I knew he was awake and I had a busy day so 9am was good for me. He said thanks, threw the papers in the air and said "screw the IRS". I thought he was being his normal funny self. THEN I smelled the booze and realized he was drunk already, at 9am.

We have lived next door to him for 10 years and knew he drank because he always has a drink in his hand when he is outside after work, but 9am is a first in our experience. It also explains a lot of things.

Thanks all for the help, Maybe when he sobered up he looked at the print outs I gave him.

Gammyt, you've already invested too much of your time with someone who will never use the help offered. At some point, it's not your problem, you did all you can, and you move on. But you sound like a good neighbor to me!

Ditto what sushipup said. You can't take the world on your shoulders. Don't let his problems drag you down. He's got to want the help and be willing to put forth the effort. A drink in hand isn't going to get him there. He knows you care.

Oh I know it isn't my problem and I wont talk with him about money again.

I just hope he pays his mortgage and property taxes because that affects the value of my home.

You have done the best you can. Just smile, say good morning and that is it. If he asks any more questions, just smile and say you have to ask someone else, I don't have that information. BUT