A tax preparer reviewed and filed my 2024 Federal taxes. The completed return showed that I was due a refund and did not include any penalties. I received the refund, which was lower than the amount on the return, and subsequently received IRS Notice CP30 saying a penalty was charged for failing to pay estimated taxes, and my refund has been reduced. The Notice says, "We reviewed your estimated tax penalty computation for the tax period ended 2024, and found an error," and includes the penalty calculations.
My return included Form 1040 with Schedule C for self-employment earnings, Schedule B for interest and dividends, and Schedule D for capital gains. I paid my quarterly estimated taxes on the due dates, but increased the payments in Q3 and Q4 to account for a Roth conversion and realized capital gains in the 2nd half of the year.
I spoke with another tax preparer from the same company (since the one I worked with was out of the office) to review the Notice. I was told the IRS was responsible for calculating the penalty, not the tax preparer.
I have the following questions:
1) Why did I owe a penalty since my overall tax payments satisfied the required taxes, and I was due a refund? My understanding is that a penalty may be avoided if a taxpayer owes less than $1,000 in tax.
2) Who is responsible for calculating the estimated tax penalty - the tax filer/preparer or the IRS?
3) Since my income increased in the 2nd half of the year, should the tax return have included Form 2210 - Schedule A1 - Annualized Income Installment Method computation to avoid the penalty?
Thank you for your time and attention to this post.
