I paid 110% of tax from last year, yet the program is trying to charge an underpayment penalty. Per Pub 505, it is incorrectly assessing me an underpayment penalty.

Forum|Forum|1 year ago
February 17, 2025
1 reply
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SabrinaD2

Alumni - Expert

If you paid 110% of last year's tax but TurboTax is still calculating an underpayment penalty, here's a summary of what might be happening and how to address it:

IRS Requirements: The IRS imposes underpayment penalties if you don't withhold or pay enough tax on income received during each quarter, even if you pay your total tax bill by the April deadline or are due a refund,

Annualizing Your Tax: To potentially reduce or eliminate the penalty, use the "annualizing your tax" feature in TurboTax:

Be sure you are logged in TurboTax then:
- TurboTax Online/Mobile: Go to "annualizing your tax".
- TurboTax Desktop: Select "Search Topics", then search for and select "annualizing your tax"
TurboTax take you through the steps to possibly reduce what you owe.

For more details, you can refer to the TurboTax support article here.

patrickmdunnAuthor

Level 2

I understand but since I withheld and submitted 110% of my 2023 tax liability, there should not be a penalty assessed and it should be waived per the IRS Pub 505.

Do I have the ability to uncheck the box on the software?