MonikaK1
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Thank you; I have reviewed the file.

 

I found no entries made in the California Underpayment Penalty interview. I recommend that you return to the California section and complete the Underpayment Penalty interview under Other Situations. Your answers to the questions affect the calculation of the penalty.

 

Did you also review the Underpayment Statement in the California forms list? It provides a chronological listing by quarter of events or transactions that impact the penalty calculation, including rate changes during the year. If the dollar amounts and dates on the form are correct, the calculations on the statement appear correct.

 

The Running Balance, Percent, and the Number of Days between events are determined and with this information, the penalty is computed. The benefit of this presentation is the simplicity of display and the highest level of accuracy. Each event is considered individually. Multiple payments per quarter and penalty accrued are both handled with this method.

 

The Event and Date Columns chronologically present each event that may have an impact on the calculation. They include Amount Due, Applied Amounts, Withholding, Voucher Payments, Rate Changes (if applicable), Compounding (if applicable) and Date Return Filed.

The Underpayment Statement allows up to four amount due and withholding dates which default to the applicable state due dates. If your state has an underpayment calculation for farmers, only one amount due date and withholding date are presented. The statement can also accommodate up to eight voucher payments and dates. These too will default to the state due dates previously mentioned. The last event is the return Date Filed.

 

The events are listed below with the state forms or statements from which the information may flow:

 

Amount Due: Calculated within the applicable state form used for computing underpayment of estimated taxes by individuals.

  • Applied: From your state main form if it has a separate line for Overpayment Applied or from the Tax Payments Worksheet, line 6, Overpayment from Previous Year Applied to Current Year.
  • Withholding: From the total state withholding line of your state main form split quarterly. To override the splitting of withholding into quarterly amounts (if applicable in your state) enter the correct withholding per quarter on the applicable state form/statement.
  • Payment: From the Tax Payments Worksheet, lines 1 through 5(e), date and amount columns.
  • Date Filed: From the Tax Payments Worksheet, date return will be filed and balance paid. The Date Filed will default to your state due date if left blank.

 

Note: No data entry is required for this statement. If changes are necessary go to the appropriate form or statement as shown above, make the required changes and the new calculations will be reflected in the updated statement.

 

Any event listed in the Event column will have a positive or negative impact. The Amount Due Column will list positive impact amounts such as Amount Due or Compounding (if applicable). The Amount Paid Column will list negative impact amounts such as Applied, Withholding and/or Voucher Payment Amounts.

 

Combining any event with the previous Running Balance amount results in the current outstanding balance until the next event or transaction is realized and a new Running Balance is computed.

 

The Running Balance, Percent and Number of Days Column amounts are all used in computing the penalty figure which appears in the Penalty Column. If your state has a Rate change during the year this will be reflected in the Event and Date Column as well as the Percent Column. Combining all the figures in the Penalty Column result in the total penalty to be carried to your state underpayment form.

The Underpayment Penalty Statement will be calculated and printed under the following conditions:

  • - If more than one payment is made for any quarter, or;
  • - If any payment is not made timely, or;
  • - If an overpayment is applied backwards to a previous quarter, or;
  • - If there is an amount on the line for remaining underpayment from the previous period (if applicable).

If the above conditions are not met the statement will not be produced. All amounts and penalty calculations will appear on the applicable state form used in computing underpayment of estimated tax by individuals. In this case, the state form is adequate for clearly presenting the penalty computations.

 

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