Delaware imposes penalties and interest for underpayment or late payment of income taxes, as well as for late filing of returns with a balance due. These penalties are governed by the Delaware Code and are detailed in the instructions for Forms PIT-RES (Resident) and PIT-NON (Non-Resident), as well as Form PIT-UND (Underpayment of Estimated Taxes).
Interest on Underpayment or Late Payment
- Interest accrues at a rate of ½% per month on any underpayment or late payment of income taxes.
- This interest applies from the date the payment was due until the date it is paid.
Penalty for Late-Filing of Balance Due Return
- A penalty of 5% per month of the balance due is imposed for failure to file a timely return.
- This penalty applies to late-filed returns where a balance is owed.
Penalty for Underpayment of Estimated Taxes
- The penalty for underpayment of estimated taxes is calculated using Form PIT-UND, which includes worksheets to determine whether an underpayment exists and to compute any penalty due based on the amount and period of the underpayment.
- The resulting penalty is added to Line 45 (PIT-RES) or Line 59 (PIT-NON) of the main return.
Exceptions to Penalties
- No tax liability in prior year: If you had no Delaware tax liability in 2024, you are exempt from the penalty.
- Sufficient estimated payments: Generally, no underpayment penalty applies if your withholding and timely estimated tax payments equal or exceed the required annual payment. The required annual payment is generally the lesser of 90% of the current year's Delaware tax liability or 100% of the prior year's Delaware tax liability (110% if the prior year's Delaware adjusted gross income exceeded $150,000, or $75,000 if married filing separately), provided the prior year covered a full 12-month tax year.
- Higher threshold for high-income filers: If your 2024 Delaware adjusted gross income (AGI) exceeded $150,000, or if you are filing as Married Filing Separately and your AGI exceeded $75,000, use 110% of your prior-year liability instead.
- Low payment threshold: If the required annual payment for estimated taxes is $800 or less, no penalty applies.
Special Rules and Waivers
- Farmers and fishermen have special rules; refer to Form PIT-EST or PIT-UND instructions for details.
- Waivers may be available under certain circumstances; consult Form PIT-UND or contact the Delaware Division of Revenue.
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Disclaimer: Always verify details with the official Federal or State Department of Revenue Forms and Instructions. For complex tax situations, consult a CPA or tax attorney.