The underpayment penalty can also occur if you didn't pay in one quarter, even if you doubled up and "covered it" with the next quarterly payment. Then it's really more of a quarterly late payment penalty, than it is an underpayment penalty.
It's also possible if your quarterly income varies throughout the year. For example, you have $20K in the first quarter, only $2K in the second quarter (because your business is seasonal) and $20K in each the third and forth quarter. That's a total of $62K for the tax year. So your quarterly payments for each quarter would be (as an example) $4000 for each the first, third and forth quarters, and only $400 for the 2nd quarter. The total taxes paid each quarter add up to $12,400 which "averages out" to $3,100 per quarter. Having only paid $400 the 2nd quarter is a gross underpayment.
By default, the IRS averages things out and by that average you underpaid the forth quarter - even though your total taxes paid may equal or exceed your total tax liability at year's end. Here's how to account for that and reduce, if not completely eliminate the underpayment penalty.
In the TurboTax under the "Other Tax SItuations" tab elect to start/update "Underpayment Penalties" and work it through. It can't hurt. But it could help.
