Helena owed $1,100 on her 2024 tax return. She mailed a check to the IRS for the balance due. At the time, she did not have money in the bank to cover the check. The check was cashed by the IRS earlier than she thought and returned for insufficient funds. What is the amount of the penalty Helena will owe?

Question

GPT-4o mini · Answer

When a check is returned for insufficient funds, the IRS charges a penalty for the bounced check. According to IRS guidelines, the penalty for a bounced check is typically 2% of the amount of the check if it is returned for insufficient funds.

In Helena's case, since she owed $1,100 and the check was returned due to insufficient funds, the penalty would be calculated as follows:

Penalty = 2% of $1,100 Penalty = 0.02 × $1,100 Penalty = $22

Therefore, Helena will owe a penalty of $22 for the bounced check. Additionally, it is important to remember that she may also incur interest on the unpaid tax liability, and any other applicable penalties, but the direct penalty related to the returned check is $22.