Failure to pay proper estimated tax. (code section 6654) I'd appreciate if you help me look into this to find out where the error of underpayment was. Thank you.
we have none of your tax info to determine why there was a penalty and you shouldn't post it on this public forum. I have provided a link to IRS form 2210 which is used to calculate the penalty. TT doesn't prepare a 2210 when the simplified method is used.
here are the rules
(B)Required annual payment
For purposes of subparagraph (A), the term “required annual payment” means the lesser of—
(i)90 percent of the tax shown on the return for the taxable year (or, if no return is filed, 90 percent of the tax for such year), or
(ii)100 percent of the tax shown on the return of the individual for the preceding taxable year.
Clause (ii) shall not apply if the preceding taxable year was not a taxable year of 12 months or if the individual did not file a return for such preceding taxable year.
(C)Limitation on use of preceding year’s tax (for line 8 of form 2210)
If the adjusted gross income shown on the return of the individual for the preceding taxable year beginning in any calendar year exceeds $150,000, clause (ii) of subparagraph (B) shall be applied by substituting “110 percent” for “100 percent”.
even if you meet these tests there can be a penalty if you made untimely estimated tax payments. they were due 4/15/19, 6/15/19, 9/15/19, 1/15/20
The program only calculates an estimated penalty based on the information you provide ... the IRS reserves the right to calculate the penalty based on the information they have on hand and the date you actually pay the taxes and bill you for the difference.
Now ... do you need to make estimates ?
What are estimated taxes?
Do I need to make estimated tax payments to the IRS?
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2015 SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.
You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
How do I make estimated tax payments?
Can TurboTax calculate next year's federal estimated taxes?