Question

Helen owed $1,000 on her 2022 tax return. She mailed a check to the IRS for the balance due. At the time, Helen did not have money in the bank to cover the check. The check was cashed by the IRS earlier than Helen thought and returned for insufficient funds. What is the amount of the penalty Helen will owe?

Answer 1

Helen will owe a penalty for bouncing a check to the IRS, which is typically a fixed fee or a percentage of the check amount, depending on the check's value. For her $1,000 check, she will likely face a fixed fee as a penalty.

Step-by-step explanation:

When Helen mailed a check to the Internal Revenue Service (IRS) without sufficient funds in her bank account, she incurred a penalty for the bounced check. The IRS typically charges a dishonored check penalty, which can either be a specific dollar amount or a percentage of the check amount, depending on how much the check was for. As of the latest guidelines, if a check is for an amount greater than $1,250, the penalty is 2% of the check amount. For checks of lesser amounts, the penalty could be a smaller, set fee. Given that Helen's check was for $1,000, she would incur a penalty based on the fixed amount set by the IRS for checks under $1,250, which could be around $25 or more.