Generally, you'll have to pay an underpayment penalty for 2021 if you owe more than $1,000 in taxes (after taking withholding into account) and:
* Your taxes withheld don't cover at least 90% of your 2021 tax liability, or
* Your taxes withheld aren't at least 100% of your 2020 tax liability if your AGI is up to $150,000 or 110% if your AGI is more than $150,000. (The amount is $75,000 if you're married filing separately.)
You stated that you have no owed tax liability, made all four estimates, and did so on a timely basis. In addition, your income was much lower than in 2020. In your situation, please elect out of TurboTax calculating a tax penalty on your return.
To change your election, please follow the instructions below:
- Open your return.
- Click on Federal Taxes
- Click on Other Tax Situations
- Scroll down to underpayment penalties and click Update.
- Answer the questions on the following screens.
- Skip through the screens until you get to the screen Let the IRS Bill Me Later and Click on that option, rather than Pay It Now.
Once you select that option, there will only be no entries on Line 38 of your 1040.
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