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dctt2
New Member

Lawsuit Settlement causing Estimated Tax Penalty

Long story short, I was awarded a lawsuit settlement of $60,000 last year.  This was unexpected as I was the defendant in the litigation.  Once the plaintiff realized their mistake, they paid me $60K to not counter-sue provided some terms were met.  I agreed.

 

Turbotax wants to hit me with a $47 estimated tax penalty.  Not terrible but not great either.

 

When requesting the waiver, should I keep the words as brief as possible?  Also, what supporting documentation should I be attaching?  There were newspaper articles about the settlement, and even Fox News picked it up.  lol

 

 

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1 Reply
Cynthiad66
Expert Alumni

Lawsuit Settlement causing Estimated Tax Penalty

You should request the waiver, if you feel qualified.  You can just explain the situation and if they feel it necessary to see proof the IRS will request it.  However, $47 is considered Diminimus by the IRS and  will most likely be approved without further investigation.

 

The law allows the IRS to waive the penalty if you didn't make a required payment because of a casualty event, disaster, or other unusual circumstance and it would be inequitable to impose the penalty,

 

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