MD 502UP wrong interest factor 4th quarter (2024 state estimated payments)

Question

After entering the four MD estimated payments, the total penalty calculated is not right (line 18).

4th quarter payment, which deadline is on 01/15/25, was paid a bit late on 01/21/2025.

The interest factor on Form 502UP, line 16, for the 4th period is set to 0.0283% by default. However, according to the MD 502UP instructions, it needs to be modified depending on how late the last payment is.

In this case, I performed a manual calculation, and the correct interest factor for the 4th period should be 0.0096%.

This formula (1 month late / 12 months x 11.4825% for 2024 tax year) should be taken into account when calculating the 4th period interest factor, but I cannot get the right % on the form. Instead, the full 0.0283% is used, increasing the total underpayment penalty for MD ($400 difference).

I checked on the community and couldn't find this issue mentioned in the past.

I worked together with the Intuit technical support, and the assistant couldn't find a way to fix this issue.

Since I'm a new user, I'm hoping that I missed an entry somewhere, but I tried everything and still couldn't find an answer.

I know I could override the state underpayment penalty field, BUT that means I need to manually calculate the interest factor and penalty and force the amount on the form. Most of my clients are MD-based, and this is a form that I use all the time and doing it manually will be time-consuming. This should be an easy calculation for a tax professional's preparation software.

Thanks in advance!

Letlarrydoit · Accepted Answer

Hi Kathi,Thanks for your reply. Yes, I already talked with support and their answer was:"development stated reason being is the amounts are hard-coded on the form with little instruction from the state" The solution:"At this time the option would be to override the amount on line 18 and paperfile as the actual interest percentage cannot be changed"A couple of things about this issue:1- Little instruction from the state: Not true at all. 502UP instructions gives the exact % to be used for late payments on the 4th period and how to calculate the interest based on the late payment date.I know this because I had to manually calculate the penalty. It's not complicate but time consuming. 2- MD won't accept an override on the 502 form which makes impossible to calculate or fix the wrong calculation. It could be avoided by either using the right calculation OR overriding the % on a different field that doesn't create the e-filing error.Instead, I have to manually calculate the penalty AND PAPER FILED a return.This solution defeats the purpose of using a tax professional software (not cheap by the way) and creates more issues for me, for example having to explain to my client that in the year 2025, he will have to print and mail a state return because the software cannot handle a simple math calculation.I'm also surprise that this issue cannot be fix when the software can deal with more complex situation than a simple % penalty calculation.Anyway, thanks for your reply.

Kathi_at_Intuit · Answer

@Letlarrydoit Welcome to the community and thank you for choosing ProConnect Tax! We checked on the percentages you mentioned. Since these are hard-coded, overrides would indeed need to be used. For this functionality, we highly recommend submitting an idea in the ProConnect Tax Idea Exchange. Please search first to see if anyone has already suggested it; if so, you can upvote their idea. If not, feel free to submit a new one so others can vote on it. Here is the User Guide for it. We look forward to your contributions in the community! Happy posting.

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