IA computations

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  • #46112
    Brett Thomspn
    Participant

    The IRS computes its IA adding on interest. So when I tell my client the 72 monthly payments are $700 and the IRS says $800, I look bad. The difference is interest. I go to TaxInterest software and also miss the mark. TaxInterest says they don’t do this computation. Anyone else had this problem and solved it???

    #46116
    Eric Green
    Keymaster

    Brett I usually will use an online calculator but I assume 10% for interest on these calculators because of the failure to pay penalty, which you also have. I then add something on for buffer, so if the $700 in the calculator ends up at $770 I will tell clients it will be “around $800 give or take” because of the interest and the 1/2% per month for failure to pay penalty, which keeps running until the 50 months of penalty run.

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