Letter from IRS

Forum|Forum|3 years ago
May 10, 2023
3 replies
32 views

I received a letter today form the IRS that states I have been charged a penality for failing to pay estimated taxes. I paid my taxes before the deadline and used turbotax. The letter also states "we reviewed your estimated tax penality computation for the tax period ended 2022, and found an error. Our correction of this error increased the penality to $171.17." Does anyone know what this means and what I have to do?

Best answer by Critter-3

The IRS wants you to pay your taxes throughout the year (hense quarterly estimated payments are expected if you don't have enough withholding) and not just at the end of the year on the return. The program may have computed and added an estimated underpayment penalty using the information you entered in the program but the IRS/state have the right to calculate the penalty based off the information they have on file. The program did not make an ERROR dispite what the IRS letter mentions but the IRS did adjust the penalty and probably added some interest. That is "what it means" and all you can do is pay the bill as directed on the notice.

VolvoGirl

Level 15

Did you have a penalty on line 38? it's not for filing or paying late. It doesn't have to do with last year's tax return or not paying estimates for this year. The penalty is an "estimated" amount. It's a penalty if you owe too much or for not paying in enough withholding during the year or not paying in evenly. It's common for the IRS to adjust the amount of penalty.

GoodAmericanAuthor

Level 2

There is nothing for line 38 on my 1040.

VolvoGirl

Level 15

Strange Turbo Tax didn't calculate a penalty on 1040 line 38.

Mike9241

Level 15

to avoid understimated tax penalty the total of your timely estimated tax payments and withholding (IRS assumes 25% of total for each period) must meet one of these criteria.

1) 90% of 2022 tax or

2) 100% of 2021 tax. its 110% if your 2021 adjusted gross income was $150K or more

doesn't the notice show the calculation? you'll have to compare it to the Turbotax 2210 to see where the difference lies.

Mike9241