I just received a balance due notice with a penalty code C for “underpayment of estimated tax (estimated)” for tax year 2021 from California's Franchise Tax Board.
I do not believe that I should owe any penalty due to underpayment. During 2021, I paid more than my necessary estimated taxes, as calculated and generated by TurboTax in order to avoid any underpayment penalty:
- Overpaid tax from 2020 applied to my 2021 estimated tax. (No need for Voucher #1 as a result.)
- Voucher #2: due on 6/15/2021. Paid on 6/9/2021 more than the specified amount calculated by TurboTax.
- Voucher #4: due on 1/18/2022. Paid on 1/4/2022 more than the specified amount calculated by TurboTax.
FYI, California does not require a Voucher #3, and thus TurboTax does not generate such a voucher. Also, TurboTax calculated my estimated 2021 quarterly California tax payments based on 90% of what I actually owed in 2020, which is what I assume to be the required amount in order to avoid any subsequent underpayment penalty.
So why is the FTB assessing me a penalty for the underpayment of estimated taxes?
