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How to enter federal and state interest rates

SOLVEDby Intuit172Updated October 26, 2023

Federal interest rates

Click here to view the federal interest rates.

State interest rates

Click on any state abbreviation and you will be redirected to the respective webpage for the given taxing authority.

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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).

To enter the state interest rates for a specific client file or for a multi-state return:

  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.
      For multi-state returns (except Exempt Organization):
    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.
ProSeries Basic has the same table for entering interest rates, however, the Late Penalties and Interest Worksheet is not supported.
ProConnect Tax currently has no way to automatically calculate the federal interest due, as there is no place to enter the federal interest rates. At this time, the only solution is to manually calculate the interest due and enter it in the Interest field on the Penalties and Interest input screen.

 

To manually 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 the manually calculated amount of interest in the Interest field.

 

Though the program currently is unable to automatically calculate federal interest due, it can calculate the state interest due. To automatically calculate the state interest due, you must enter the number one in the Interest (1=automatic) field and input the state interest rates in the State Interest Rates section of the Penalties and Interest (2210) input screen.

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.

This is per the 1040X form instructions: "The IRS will figure any interest due and send you a bill."

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