**Understanding Tax Penalties: A Case Study**John filed his 2021 income tax return on December 20, 2022, paying the $10,000 amount due at that time. On April 1, 2022, John had received a six-month extension to file his return. He did not have a reasonable cause for failing to file his return by October 15 or for failing to pay the tax that was due on April 15. However, John’s failure to comply with the tax laws was not fraudulent.**Task:**Compute the failure to pay and failure to file penalties for John.- **Failure to pay penalty:** [Input box] ❌- **Failure to file penalty:** [Input box] ❌This exercise highlights the importance of timely filing and payment of taxes, as well as understanding the implications of extensions and potential penalties.

A tax return is the form which is to be submitted to a taxing body that includes all the details related to income,personal details and all other data.In tax return, taxpayers compute their tax liability, make the tax payments or apply for refunds if any.Calculation of the failure to pay penalty and failure to file penalty for J Particulars Amount Failure to pay penalty period From April to December 2022 (9 months) Amount of tax liability $10,000 Failure to pay penalty $10,000 x 0.5% x 9 months = $450 Failure to file penalty period From October 2022 to December 2022 - 3 Months Failure to file penalty $10,000 x 4.5% x 3 months = $1,350 Therefore, the failure to pay penalty is $450 and failure to file penalty is $1,350. The failure to pay penalty is ascertained to be $450 and failure to file penalty is ascertained to be $1,350.

Business

Accounting

John filed his 2021 income tax return on December 20, 2022, paying the $10,000 amount due at that time. On April 1, 2022, John had received a six-month extension of time in which to file his return. He has no reasonable cause for failing to file his return by October 15 or for failing to pay the tax that was due on April 15. John's failure to comply with the tax laws was not fraudulent. Compute the failure to pay and failure to file penalties for John. Failure to pay penalty: $ X Failure to file penalty: $ X

John filed his 2021 income tax return on December 20, 2022, paying the $10,000 amount due at that time. On April 1, 2022, John had received a six-month extension of time in which to file his return. He has no reasonable cause for failing to file his return by October 15 or for failing to pay the tax that was due on April 15. John's failure to comply with the tax laws was not fraudulent. Compute the failure to pay and failure to file penalties for John. Failure to pay penalty: $ X Failure to file penalty: $ X

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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