If TurboTax recommends including a penalty with your tax return, don’t accept the recommendation. Wait and see if the IRS bills you. If the IRS does bill you for a penalty, you can apply for a waiver. There is a waiver procedure for a first time taxpayer if you never owed a penalty before, and there is also a waiver procedure for cause, which it would seem you would have documents to back up.
However, interest can’t be waived by law. So if you owe a substantial tax bill, you may want to make an estimated payment now at www.irs.gov/payments. You would list the estimated payment on your tax return and if you pay too much, you will get a refund. Making a payment now would reduce any interest if you are deemed to owe interest.
You also could have made an estimated payment up to January 15, and it would’ve counted under the law the same as if you had withholding. It’s too late for an estimated payment to count as a timely payment, but it will still reduce any interest you might owe.
And finally, the late payment penalty is less than 1% per month, so if you make an estimated payment now, your maximum penalty would be less than $10 per $1000 of tax you owe. The word “penalty“ is scary, but the actual dollar amount may not be worth worrying over.
