I received a notice from IRS that I have a penalty for "Failure to pay proper estimated tax"

Hi All,

 

Why doesn't or wouldn't TT tell me I owe late payments?

 

We received a small estate inheritance without advanced warning of course this increased our AGI.   WE had no idea this was coming so obviously didnt pay it ahead of time.


Is there a way to appeal this?

 

Thanks,
Ray
Ray

rjs
Level 15
Level 15

After you file

@rlmiller999 

It's not clear what you mean by "owe late payments." Paying late is not the same as failing to make estimated tax payments. TurboTax has no way of knowing whether you are late paying tax that you owe.


TurboTax also has no way of knowing if you receive taxable income during the year that would require you to make estimated tax payments. But if you did not pay enough during the year, TurboTax will automatically add the estimated tax penalty to your tax return. Does your 2019 tax return have an estimated tax penalty on Form 1040 line 24? TurboTax also gives you the option to omit the penalty from your tax return and let the IRS bill you later. Did you select the option to let the IRS bill you later?


It's also possible that the IRS changed something else on your tax return that resulted in an additional penalty. Did the IRS make any other changes to your tax return?


An inheritance is normally not taxable and is not even shown on your tax return, so it does not increase your AGI. If your inheritance is included in the income on your tax return there must be some significant detail that you have not included in your post. Did you receive something other than a straight cash inheritance? Did you get a 1099-xxx form reporting the inheritance? (A normal cash inheritance would not be reported on a 1099-series form.) Or the estimated tax penalty might have nothing to do with the inheritance.


Please keep all the discussion of your specific situation in this thread, so that all the relevant information is in one place. Don't add questions to other people's threads whose situations might be different from yours. However, the other threads that you posted to do explain the basics of estimated tax payments and the penalty for not making estimated tax payments when they are required.


If you have further questions, please tell us what year the IRS notice is for, and whether you used TurboTax Online or the CD/Download TurboTax software.

 

rjs
Level 15
Level 15

After you file


@rlmiller999 wrote:

Is there a way to appeal this?


You can request First Time Penalty Abatement from the IRS. See the link below on the IRS web site for more information. Note that interest on the tax that you owe cannot be reduced.


Penalty Relief Due to First Time Penalty Abatement or Other Administrative Waiver