Underpayment penalty

[taxnovice]

Turbotax calculated over $1400 penalty this year and we paid along with our taxes. We just got a refund from IRS for around $1000 - the letter says we miscalculated our penalty. If turbotax is miscalculating our penalty, I wonder what else it is miscalculating  - losing faith in this software

[JotikaT2]

The penalty calculation in TurboTax is prepared based upon entries into the program.  Since this is a public forum, it's hard to determine why your penalty calculation was overstated as compared to what was calculated within TurboTax.  This could be the result of having penalties in prior years and not paying enough in estimated taxes in 2024, or you could have had a significant increase in income in 2024 but when entering the information into TurboTax, Form 2210 was not annualized to reflect when the income was actually received.  This FAQ from the IRS which provides more guidance on how the penalties are calculated.

Please see Estimated Taxes:  How to Determine What to Pay and When for more details on how the penalty is calculated as well as some tips to assist you in the future.