I pay estimated taxes, and I paid my 2025 tax liability in full prior to filing my taxes. I still received a penalty notice.

Forum|Forum|1 month ago
April 30, 2026
1 reply
23 views

I make a Roth conversion each December, and an associated larger estimated tax payment at that time. I think the issue with penalty is the estimated tax payments were not 4 equal payments (last one being larger)

TurboTax Online

DawnC

Level 15

The IRS underpayment penalty is based on when tax was paid during the year, not just whether the full 2025 balance was paid before filing. The penalty can apply even if you paid the full year’s tax by the return due date or even if you got a refund.

Because your Roth conversion happened in December, the IRS’s assumes you earned that money steadily from January through December. You can choose to annualize your income on Form 2210 by adding Schedule AI (annualized income) which may lower or eliminate the penalty.

How do I complete Schedule AI?

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