If you are showing an underpayment penalty on your Arizona return, in TurboTax Desktop, go back through the Arizona interview section and review all of the input screens. Towards the end, you will encounter an Underpayment Penalty screen. Review the topic and answer the questions to determine whether the penalty can be reduced or eliminated.
You could also go into Forms mode and look for Arizona Form 221, Underpayment of Estimated Tax by individuals. The Annualized Income Installment Worksheet is on page 2 of the form. It is preferable to fill out the questionnaire rather than enter information in Forms mode if at all possible. You especially should avoid overriding a numerical entry. as this could invalidate your Accurate Return Guarantee.
If you made any estimated payments, they should be recorded in the Federal return section.
See here for more information about the underpayment penalty from the State of Arizona.
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