Estimated tax payment

[KA26]

I got a bill from the IRS saying they reviewed my estimated tax penalty computation, and they found an error so therefor I owe them some additional money, Turbo tax did the calculation I just paid what it told me too. Does turb tax guarantee their computations? I underpaid so I knew I would owe a penalty the question is why didn't the program figure it out correctly? Anyone else have this problem? 

[TomD8]

Was the penalty you were assessed perhaps due to late payments?  The IRS will assess a penalty for late payments even if the payment amounts are correct.

https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes#:~:text=You%20also%20m....

Here is how TurboTax calculates estimated tax payments:

How does TurboTax calculate my estimated tax payments? (intuit.com)

[KA261]

yes it was,  but that wasnt what I was wondering...I knew I would owe and I have owed in previous years...but this time it seem like TURB TAX ( the program) did not calculate it ( the penalty)  correctly as the IRS said the calculation was incorrect and I owed and extra amout...about $150...which I have already paid....but it seems like the Turbo Tax program calculated it wrong...its the first time that has happened and I was wondering if it had happened to anyone else? 

[TomD8]

TurboTax can't calculate future late payment penalties because the program has no way of knowing when the user will actually make the payments.

[KA261]

This was not a future late payment it was for 2022 form 1040 ....so everyhing was a known ...normally Turbo Tax just says ...you owe X and it adds it to the ballance of what you need to pay...same thing for the 2022 but the IRS said it was mis calculated....so I was wondering if there was a programing error in the TURBO TAX program and was wondering if anyone else experienced this ?? 

[VolvoGirl]

Did you have a penalty on 1040 line 38?  The amount Turbo Tax calculates (or doesn't) on your return line 38 is only an estimate.  Turbo Tax can not figure it accurately because they don't know exactly when the IRS or state will get your return and tax due payment. It's very common and normal and expected for the IRS or state to bill you for more or send you a refund.

[KA261]

Thanks 

[Opus 17]

---

@KA261 wrote:

This was not a future late payment it was for 2022 form 1040 ....so everyhing was a known ...normally Turbo Tax just says ...you owe X and it adds it to the ballance of what you need to pay...same thing for the 2022 but the IRS said it was mis calculated....so I was wondering if there was a programing error in the TURBO TAX program and was wondering if anyone else experienced this ?? 

---

It's just one of those things that, when any tax program calculates a penalty, it's only an estimate and the IRS always has final say.  It should not be too far off.  The biggest reason for a difference is that one of the late fees is based on being late "any part of a month".  So if the due date was April 17, you are one month late if they get a payment on May 17, but 2 months late if they receive the payment on the 18th.  (And the same is true for each quarterly estimated payment.  Best to pay those a few days early.)

The other thing I recommend is to decline to include a penalty and wait for the IRS to bill you.  That way it will be the final figure.  That also gives you a chance to apply for a waiver of the penalty, if it is your first time owing a penalty or you have a reasonable cause to ask for relief.  It's harder to apply for relief if you paid the penalty when you filed. 

https://www.irs.gov/payments/penalty-relief

[TomD8]

"The other thing I recommend is to decline to include a penalty and wait for the IRS to bill you."

If you choose to follow that recommendation, be aware that the IRS charges interest on any unpaid tax, penalties, and interest until the balance is paid in full, and the interest rate on underpayments is compounded daily.  The current IRS interest rate is 7%.

https://www.irs.gov/newsroom/interest-rates-remain-the-same-for-the-third-quarter-of-2023#:~:text=Fo....