Filed extension on time and owe state taxes, how do I calculate amount owed?

If you owe interest and penalties, they'll bill you.

OH great! :-( Thanks buddy!

If you had a penalty for underpayment of estimated taxes, Turbo Tax would calculate that for you. There is no estimated tax penalty if your 2008 and 2009 California tax liability, after withholding credits but not including estimated tax payments, was less than $500 ($250 MFS), if you had no California tax liability in 2008, or if your withholding plus timely estimated tax payments for 2009 covered at least 100% of your 2008 tax liability (110% if your AGI is more than $150,000 ($75,000 MFS)).

You will be subject to interest on the underpaid tax, running from April 15 to the date of payment, plus a late payment penalty of 5% of the tax shown on the return that was not paid by April 15. The FTB will calculate those penalties and bill you.

Katie in San Diego

Is that 5% a month to a maximum of 25%? Why should this penalty apply when you have an extension (in this case an automatic extension)?

The extension is an extension of time to file your return, not an extension of time to pay your tax. The penalty is for late payment, not for late filing.

Bob Sandler

If you file a federal extension, both the 5% for filing late and paying late are reduced to 0.5% or something like that. Yet with CA it is still 5% -- filing late is waived, but paying late is 5%. Seems kind of unfair. If you filled out form FTB 3519 and sent it in by April/15, then would the 5% per month penalty for paying late be reduced. What if with form 3519 you sent $0?

Incorrect. "If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty. "

Note the use of the word "by", not "to".

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Yet with CA

Filing a California Form 3519 without sending money is a complete waste of time.

See FTB Pub. 1140.

-Mark Bole

Yes. To illustrate my concern, suppose you owe money with your 1040 filed June/5. Say you didn't file a federal extension 4868. You will get hit with a 5% penalty per month (not 10%). But if you filed a form 4868, the penalty will be just 0.5% per month. Is that right?

Yet with CA, the penalty will be 5% per month. Is there a way to get a reduced penalty?

You mean, "(not 5.5%)" [5% FTF + 0.5% FTP], since that is what would happen without the special rule regarding combined penalties. With the rule, your 5% FTF penalty is reduced to 4.5%, the FTP penalty is still

0.5%. You are within the 60-day overdue limit, so no minimum penalty will be imposed.

But if you filed a

Ah, I see what you're missing. California doesn't impose the failure to file (FTF) penalty unless you miss the extended due date (Oct 15), since you got an automatic extension. However if you miss that date, the penalty is retroactive to April 15th.

The FTF penalty is much worse than the FTP penalty, so it's always better to file on time (which in California is Oct 15th for everyone) even if you can't pay on time (which for both fed and CA is April 15th).

-Mark Bole

OK. So for CA, if you pay by June/5 you will face 2 months of FTP penalty. An earlier post in this thread said the penalty is 5%, which I assume is 5% a month.

My point is with a federal extension, the IRS penalty would be 0.5% per month till Oct/15. With CA, 5% per month seems unreasonable.

Wrong assumption.

It's not 5% per month.

The CA FTP penalty is 5% (*one-time only*, not monthly), plus 0.5% monthly, up to 25%. The penalty (but not interest) can be waived if you paid at least 90% of the tax due by April 15th.

So yes, CA is a little worse from federal in that regard, but not as bad as you thought.

-Mark Bole