Problem
Dylan mailed his 2017 Form 1040 on 9/27/18 to the IRS and it was received by the IRS on 9/30/18 (assume no extension was granted unless otherwise stated). The tax return reflected the following:
i. Total tax liability $50,000
ii. Less: withholding $26,000
iii. Less: estimated tax $17,000
iv. Tax Due $7,000
The tax due of $7,000 was paid on 10/10/18.
I. Will Dylan owe late filing and late payment penalties? If Dylan is liable for the section 6651(a) penalties, how much are they?
II. Assume the IRS sends Dylan a bill for such penalties; what is the procedure to avoid the penalties?
III. Is Dylan liable for the section 6654 estimated tax penalty?
IV. What would be the result if Dylan, had, on April 15, 2018, filed an extension to file the return on October 15, 2018, and paid nothing with the extension? In such instance, would Dylan owe a late filing penalty and/or a late payment penalty, and, if so, how much would each be?
V. What would be the result if Dylan, had, on April 15, 2018, filed an extension to file the return on October 15, 2018, and paid $3,000 with the extension? In such instance, would Dylan owe a late filing penalty and/or a late payment penalty, and, if so, how much would each be?
VI. If Dylan's 2016 tax return was as follows, would he be excused from the section 6654 estimated tax penalty for the 2017 tax year?
i. Total tax liability $42,000
ii. Less: withholding $12,000
iii. Less: estimated tax $17,000
iv. Tax Due $13,000
VII. How does Dylan's adjusted gross income affect your answer to #VI above.