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State of California Franchise Tax Board

I filed my return on time. Why did I get a penalty?

If you received a notice showing a penalty for Failure to Pay the Tax Shown on a Return by the Due Date, you were charged an underpayment penalty for not paying your taxes by the April due date.

The penalty is 5 percent of the unpaid tax plus 1/2 of 1 percent for each month or part of a month that the tax remains unpaid not to exceed 40 months. The maximum penalty is 25 percent of the unpaid tax. The penalty is imposed regardless of an extension of time to file.

If we sent you a notice showing a penalty for Underpayment of Estimated Tax, we do not have a record of your required estimated tax payments. We require you to prepay your tax through withholding from your wages or by prepaying your estimated tax in installments totaling either 100 percent of your prior year's tax or 90 percent of your current year's tax. Individuals whose 2015 adjusted gross income is more than $150,000.00 (or $75,000.00 if married filing a separate return), must figure estimated tax based on the lesser of 90 percent of their tax for 2015 or 110 percent of their tax for 2014. This rule does not apply to farmers or fishermen.

We impose an Underpayment of Estimated Tax Penalty on the amount of tax underpaid from the date the installment was due to the date the installment was paid or the date the return was due, whichever is earlier. We compute the penalty at the same rate as interest for the period of underpayment. If you based your installments on annualized income, please complete Underpayment of Estimated Tax by Individuals and Fiduciaries Form FTB 5805 and return it to our office with a copy of the notice you have received. If your notice shows a penalty for Failure to File a Return by the Due Date, you were charged a delinquency penalty because we did not receive your return by the due date.

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