What data entry is there for the 2220 penalty? How is the penalty on Form 2220 figured?
Estimated tax penalties are calculated on Form 2220, Underpayment of Estimated Tax by Corporations. The 2220 screen is located on the first Other Forms tab in data entry. Any penalty calculated flows to line 34 (Line 33 in Drake17 and prior) of Form 1120.
The IRS uses different interest rates to figure the penalty for each quarter. Drake Tax retains the quarterly underpayment and penalty rates as of 12/31 of the calendar year.
A note at the bottom of Part IV of Form 2220, Underpayment of Estimated Tax by Corporations, explains
"Use the penalty interest rate for each calendar quarter, which the IRS will determine during the first month in the preceding quarter. These rates are published quarterly in an IRS News Release and in a revenue ruling in the Internal Revenue Bulletin. To obtain this information on the Internet, access the IRS website at www.irs.gov. You can also call 1-800-829-4933 to get interest rate information."
For more information, review the 2220 Instructions.
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