You're getting an underpayment penalty on your 2024 return because you either 1) have a balance of at least $500 due on your 2024 Michigan return, or 2) you didn't make your 2024 estimated payments on time. This penalty is not related to your 2023 tax return.
You can avoid the underpayment penalty on your 2024 return by paying - for the 2024 tax year - the lesser of 90% of your 2024 tax liability or 110% of your 2023 tax liability. This is why TurboTax is asking for your 2023 liability (safe harbor). It's not assessing a penalty on your 2023 return. Since you paid your 2023 estimates on time and had an overpayment, you were not subject to a penalty for 2023.
This penalty on your 2024 return is strictly related to your 2024 tax liability and payments.
You will need to use the amount from line 20 on your 2023 MI-1040 less lines 25–29. Multiply this amount by 110%, this is what you'd enter in that box. If you didn't pay this much in 2024, you'll be subject to the underpayment penalty.
