Hi Mindy,
Thanks for your reply. With respect to exceptions, I am not exactly sure what you mean by "$0 tax liability in 2022". I paid a lot of taxes in 2022 ... but perhaps by "liability" you meant what I may have owed when I filed had my estimated tax payments not been enough to 100% cover the total FY22 tax owed? I actually got a small refund in FY22
The 90% number is helpful. Does that mean that in most cases as long as I pay 90% of what is owed there will be no penalty? I badly underestimated my taxes in FY2 (forgot about a couple stock sales right at the end of the year). I just checked, and my estimated payments were only 71% of what I owed when I filed.
In the case we have been talking about (FY23), the penalty I was assessed seemed rational given my significant underpayment during the year, so I just paid it. In fact, I thought the penalty was fairly light given how badly I underpaid my estimated taxes during the year. Regardless, the IRS refunded the exact amount of the penalty payment.
That said, some years back I was assessed a penalty that did not seem anywhere near appropriate: the penalty was actually larger than what I owed (?).
I know it's difficult for you to comment given you are not looking at my actual returns, but I do hope that your engineers will review the TT penalty algorithm to make sure makes sense relative to IRS guidelines. With the return of my penalty payment last year, it appears - at least from the standpoint of the IRS - I actually did not owe a penalty at all. A pleasant surprise, of course, but it did remind me of the year TT assessed me a penalty that I could not understand at all. That year, I even went through the calculations by hand and could not come anywhere close to what TT reported I owed. But, I was in a hurry to file and just paid it. I did not get a IRS refund of the penalty that year ... but I am not sure that means I can deduce that I actually owed it.
Regardless, thanks for your help and if you can touch base with the "penalty engineers" to double check the algorithm used, I - and perhaps others - would really appreciate it. Thanks!
Best regards,
Mike
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