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In 2018​, Phillip​, who is​ single, has a comfortable salary from his job as well as...

In 2018​, Phillip​, who is​ single, has a comfortable salary from his job as well as income from his investment portfolio.​ However, he is habitually late in filing his federal income tax return. He did not file his 2018 income tax return until December 8 comma 2019 ​(due date was April 15​, 2019​) and no extensions of time to file the return were filed. Below are amounts from his 2018 ​return:

Requirement:

Has Phillip met all of his financial obligations to the IRS for2018​?

If​ not, what additional amounts will Phillip be liable to pay to the​ IRS?

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Answer #1

No, Philip has not met all of his financial obligations to the IRS for 2018 since he would be required to pay a penalty for not filing the income tax return within the stipulated timeline.

The amount of penalty that Philip would be liable to pay is 25% of his unpaid taxes (since, the penalty for late filing of income tax return is 5% of unpaid taxes for each month or part of month upto a maximum of 25% of unpaid taxes. In this case, the due date of filing the return was April 15, 2019 but the return was filed on Dec 08, 2019 i.e. after 8 months or part of month, hence, the same falls under maximum penalty clause i.e. 25% of unpaid taxes).

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