If you paid an underpayment penalty, TurboTax automatically generates IRS Form 2210 (Underpayment of Estimated Tax by Individuals, Estates, and Trusts).
- The underpayment penalty transfers from Form 2210 to Form 1040, 1040-SR, or 1040-NR, line 38, Estimated tax penalty.
- Taxes are pay-as-you-go. This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year. Underpayment penalties are assessed if you don't withhold or pay enough tax on income received during each quarter.
Tip: To reduce or possibly even eliminate your underpayment penalty, search for annualizing your tax (use this exact phrase) inside TurboTax. This will take you to the underpayment penalty section and we'll take you through the steps to possibly reduce your underpayment penalty. (If you don’t see Jump to annualizing your tax in the search results, make sure you’re in your return and not on the Tax Home page.).
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