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Level 2

Turbotax errs on underpayment of estimated tax penalty

Turbo Tax again this year failed to calculate correctly whether I owed a penalty for underpayment.I received a letter today from the State of NM saying we owed a penalty. Please identify the problem and fix this issue in the software.

 

2 Comments
Level 9

Turbotax errs on underpayment of estimated tax penalty

The Federal program, and each state program, contain a topic in the interview asking if you want to calculate the penalty for underpayment of estimated tax.  You can agree to do that or to allow the state to calculate it for you.  You have to choose to calculate it yourself and then complete the interview to get estimated penalties.  Even doing all that does not guarantee the penalty will be exact because the state calculates the penalty up until the time they receive and process your payment, and that may be some time after you file your return.

Level 5

Turbotax errs on underpayment of estimated tax penalty

Yes I agree. Turbo Tax says I owe $21 for underpayment of my estimated taxes. Here's the problem, I didn't make any payments at all for estimated taxes. I don't pay quarterly estimated taxes because I'm not an independent contractor. I receive W2's for all of my employers which means the estimated taxes are already taken out before I receive each paycheck. If I were to make estimated tax payments I would be paying for taxes twice. I just do my taxes and tax payments straight up with no estimated payments. This is clearly an error on Turbo Tax's part. Please fix this.