How to enter federal and state interest rates

To enter/edit the federal and state interest rates in the global options:

1. From the Settings menu select Options.
2. Select the Interest Rates tab.
3. Click on the Get Interest Rates button to download the interest rates or manually enter the IRS interest rates for each period (format is X.XX).
4. Scroll down to the State Interest Rates section.
5. Enter the state rates manually for each period (format is X.XX).

1. Go to the Penalties & Interest screen:
   • Screen 8, Penalties & Interest (2210) (Individual)
   • Screen 11, Penalties & Interest (2220) (Corporate)
   • Screen 11, Penalties & Interest (2220) (S Corporate)
   • Screen 13, Penalties & Interest (2210) (Fiduciary)
   • Screen 14, Penalties & Interest (Exempt Organization)
2. Scroll down to the State Interest Rates section.
3. Enter the applicable interest rates under the Overrides Entries in Options (10 for 10%) subsection.
   1. Hold down Ctrl+E for the applicable quarter.
   2. Enter the Amount.
   3. Select the applicable State from the drop down menu.
   4. Click OK once complete.
   5. Repeat steps i-iii for each applicable quarter and each state.

ProSeries Professional calculates these amounts on the Late Penalties and Interest Worksheet in the client's federal return.

To get these amounts to calculate:

1. From within a client's 1040 return:
2. From the Tools menu select Options.
3. Select Miscellaneous from the left side of the screen.
4. Scroll down to IRS Interest Rates for Underpayment of Taxes.
5. Enter the current interest rates.
6. These rates will flow to the Late Penalties and Interest Worksheet.

 To generate interest and penalty amounts for a late return:

1. Go to the Input Return tab.
2. On the left-side menu, select Payments, Penalties & Extensions.
3. Click on Penalties and Interest (2210).
4. Enter the date this return will be filed in the Filing date field.
5. On the top navigation menu, select Late Return Penalty & Interest.
6. Enter 1 in the Interest (1=automatic), Late filing of return (1=automatic), and Late payment of tax (1=automatic) fields
   • The federal interest rates are built into the program.
   • If state interest rates are needed, select State & Local Int. Rates across the top and enter the applicable interest rates.

Troubleshooting individual diagnostic ref. 513 - IRS interest rate(s) for interest/penalty missing

The following critical diagnostic is generating in ProConnect:

IRS interest rate(s) for interest/penalty missing. Enter interest rates in Options. (ref. #513).

If you've entered a filing date for the return that has a date with no interest rate entered, this diagnostic will generate. To clear the diagnostic, you must either wait until the interest rate is released for the time period or remove the filing date from the return.  

Enter the filing date by going to the Input Return tab, then Payments Penalties & Extensions ⮕ Penalties and Interest. Now you can enter the applicable information.

For example, if the filing date is 10/3, make sure there are interest rates in the first 3 periods (04/15-06/30, 07/01-09/30 and 10/01-12/31.)  Usually, you'll need to input the following quarter's interest rate to satisfy the diagnostic. 

Your tax software will not calculate any penalties or interest on Form 1040X.