Yes, I agree. An underpayment penalty will occur for the following reasons. The IRS tax system is pay as you go, so when you received income the IRS wants the tax dollars at the same time.
Generally, you can avoid the penalty if your total timely estimated payments and withholdings are greater than or equal to the lesser of:
- 90% of the total tax after credits for the current year, or
- 100% of the total tax after credits in the prior year
- See one exception below.
You can also avoid the penalty if the amount you owe is less than $1,000 as long as any estimated tax payments you made are timely.
Note: High-income taxpayers. If your adjusted gross income (line 11 of your 2023 Form 1040) is greater than $150,000 (or $75,000 if you're married and file a separate return from your spouse), you can avoid a penalty by paying at least 110% of your total tax from the prior year.
If you are using TurboTax Desktop you can switch to Forms to review the tax liability and penalty.
You have access to all forms when you choose to print your return in TurboTax Online/Mobile. However you are required to pay before printing, but do not have to file until you are ready. Review Form 2210 or worksheet for the penalty calculation using the information above. Have last year's return ready if necessary.
And as indicated by VolvoGirl you can follow the steps for the Underpayment Penalty.
- Search (upper right) > type underpayment penalty > click the Jump to.. link to begin
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