Identify which of the following statements is true.
A)The failure-to-pay penalty is waived if the additional tax due with the filing of the extended return does not exceed 15% of the tax owed for the year.
B)If both the failure-to-file and the failure-to-pay penalties are owed, the taxpayer will incur a maximum addition to tax of 5.5% per month.
C)Individuals having substantial income from sources not subject to regular withholding generally should make quarterly estimated tax payments to the IRS.
D)All of the above are false.

Question

Quizplus · Accepted Answer

This statement is true. Individuals with substantial income from sources not subject to regular withholding, such as self-employment income, should make quarterly estimated tax payments to avoid penalties for underpayment of estimated tax. A is false because the failure-to-pay penalty is not waived, but reduced to 0.5% per month if an extension to file and pay is requested and the additional tax due with the extended return does not exceed 15% of the tax owed for the year. B is false because the maximum combined penalty is 5% per month, not 5.5%.

Identify Which of the Following Statements Is True