This might be a naive question! I was just preparing my 1040-ES, and it occurred to me that with treasury rates so high at the moment, it might
be worth just keeping it and paying the penalty instead.

The problem is, AFAIK the penalty rates for 2023 (form 2210) have not
been announced yet so I'm just guessing they will be similar to this
years... is that likely?

Am I playing a dangerous game just to save a few pennies? :)

Tavis.

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On Thursday, April 13, 2023 at 10:31:26 PM UTC-4, John Levine wrote:

According to Tavis Ormandy <tav...@gmail.com>:

The problem is, AFAIK the penalty rates for 2023 (form 2210) have not
been announced yet so I'm just guessing they will be similar to this >years... is that likely?

The current rate is 0.5%/mo or 6%/yr. Even with recent tightening,
that is still more than what you can get on CDs or T-bills or other
liquid investments. The IRS is not totally stupid so I would expact
them to raise the rate to make sure paying late is still unattractive.

Am I playing a dangerous game just to save a few pennies? :)

Yup, although I would argue with the word "save" here.

--
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Please consider the environment before reading this e-mail. https://jl.ly
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The current IRS penalty/interest rate is 7%. It increased at the beginning of 2023. The rate is determined by adding 3% to the federal short-term interest rate rounded to the nearest full percentage. §6621(a)(1) All the details can be found in the IRB
each quarter. See for instance https://www.irs.gov/irb/2022-51_IRB for Q1 and https://www.irs.gov/irb/2023-09_IRB for Q2.

Ira Smilovitz, EA
Leonia, NJ

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According to Tavis Ormandy <taviso@gmail.com>:

The problem is, AFAIK the penalty rates for 2023 (form 2210) have not
been announced yet so I'm just guessing they will be similar to this
years... is that likely?

The current rate is 0.5%/mo or 6%/yr. Even with recent tightening,
that is still more than what you can get on CDs or T-bills or other
liquid investments. The IRS is not totally stupid so I would expact
them to raise the rate to make sure paying late is still unattractive.

Am I playing a dangerous game just to save a few pennies? :)

Yup, although I would argue with the word "save" here.

--
Regards,
John Levine, johnl@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
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On 04/13/2023 16:28, Tavis Ormandy wrote:

This might be a naive question! I was just preparing my 1040-ES, and it occurred to me that with treasury rates so high at the moment, it might
be worth just keeping it and paying the penalty instead.

The problem is, AFAIK the penalty rates for 2023 (form 2210) have not
been announced yet so I'm just guessing they will be similar to this
years... is that likely?

Am I playing a dangerous game just to save a few pennies? :)

Tavis.

The ES Penalty is computed as simple interest, currently 7%
annual, from the due date of the estimated tax payment until
the earlier of the date paid or the due date of the return.
So, as much as 7% of the estimated payment due this week,
more if the rate goes up later in the year. Prevailing
rates, shorter terms for subsequent estimated payment due
dates. Can you make that much short-term? And then there's
that ethical issue of being in full compliance with tax
filing and paying requirements.

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<< The foregoing was not intended or written to be used, >>
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On 2023-04-14, ira smilovitz wrote:

On Thursday, April 13, 2023 at 10:31:26 PM UTC-4, John Levine wrote:

According to Tavis Ormandy <tav...@gmail.com>:

The problem is, AFAIK the penalty rates for 2023 (form 2210) have not
been announced yet so I'm just guessing they will be similar to this
years... is that likely?

The current rate is 0.5%/mo or 6%/yr. Even with recent tightening,
that is still more than what you can get on CDs or T-bills or other
liquid investments. The IRS is not totally stupid so I would expact
them to raise the rate to make sure paying late is still unattractive.

Am I playing a dangerous game just to save a few pennies? :)

Yup, although I would argue with the word "save" here.

--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
--

The current IRS penalty/interest rate is 7%. It increased at the beginning of 2023. The rate is determined by adding 3% to the federal short-term interest rate rounded to the nearest full percentage. §6621(a)(1) All the details can be found in the IRB

each quarter. See for instance https://www.irs.gov/irb/2022-51_IRB for Q1 and https://www.irs.gov/irb/2023-09_IRB for Q2.


Ah-ha, that makes sense - of course they've thought of this. Well, so much for that idea :)

Thank you, very interesting.

Tavis.

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_\_V _( ) _( ) @taviso

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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"John Levine" wrote in message news:u1a4ha$1t9d$2@gal.iecc.com...

According to Tavis Ormandy <taviso@gmail.com>:

The problem is, AFAIK the penalty rates for 2023 (form 2210) have not
been announced yet so I'm just guessing they will be similar to this >>years... is that likely?

The current rate is 0.5%/mo or 6%/yr. Even with recent tightening,
that is still more than what you can get on CDs or T-bills or other
liquid investments. The IRS is not totally stupid so I would expact
them to raise the rate to make sure paying late is still unattractive.

Am I playing a dangerous game just to save a few pennies? :)

Yup, although I would argue with the word "save" here.

The one exception that was paying pretty good rates the last couple of years
is Treasury I-Bonds which are pegged to inflation and currently pay 6.89% through April 30. During the prior six-months, the were paying 9.62%. You have to keep the bonds a minimum of 12 months and if you cash them in before five years you lose a quarter's interest. During the 12-month period when
the rates were 9.62% for 6-months and 6.89% for 6-months, you MIGHT have
gotten a small advantage in delaying IRS payment, as the blended rate even
with the penalty was 6.53%, which is more than the IRS penalty. But with inflation dropping, the I-Bond rate will drop to 3.79% after April 30th, so that will no longer be that good an alternative.


--

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Tavis Ormandy <taviso@gmail.com> wrote:

ira smilovitz wrote:

John Levine wrote:

Tavis Ormandy <tav...@gmail.com>:

The problem is, AFAIK the penalty rates for 2023 (form 2210)
have not been announced yet so I'm just guessing they will be
similar to this years... is that likely?

The current rate is 0.5%/mo or 6%/yr. Even with recent
tightening, that is still more than what you can get on CDs or
T-bills or other liquid investments. The IRS is not totally
stupid so I would expact them to raise the rate to make sure
paying late is still unattractive.

Am I playing a dangerous game just to save a few pennies? :)

Yup, although I would argue with the word "save" here.

The current IRS penalty/interest rate is 7%. It increased at the
beginning of 2023. The rate is determined by adding 3% to the
federal short-term interest rate rounded to the nearest full
percentage. §6621(a)(1) All the details can be found in the IRB
each quarter. See for instance
https://www.irs.gov/irb/2022-51_IRB for Q1 and
https://www.irs.gov/irb/2023-09_IRB for Q2.

Ah-ha, that makes sense - of course they've thought of this. Well,
so much for that idea :)

When I first started practicing the IRS interest rate was enshrined
in statute. So whether the actual interest rate was higher or lower
than the IRS rate, it allowed all sorts of opportunities. Congress
saw that was happening and act to stop it. I think that much of tax
law is really just Congress playing wack-a-mole with different
approaches that have been used to take advantages of loopholes in the
system.

--
Stu
http://DownToEarthLawyer.com


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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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