TurboTax shows I owe penalty, but it is wrong...

Forum|Forum|1 year ago
March 20, 2025
6 replies
53 views

I have a couple questions and hoping someone can help me:

1) I owe less than $1,000, but TurboTax shows I owe a penalty. I checked the IRS' website and, based on the info I found, I fall under all 3 categories of not being penalized. Not sure what to do to remove this penalty? Unless the program, for some strange reason, is using the "110% Rule", which would be incorrect since last years Adjusted Gross Income for us was less than $150K. We did a Roth Conversion in December, and paid 4th quarter taxes prior to January 15, so still not sure why the program is penalizing us?

2) Regarding our Roth Conversion, in our tax return under section "Form 1099-R, Summary" "Traditional IRA Distributions", line 9 is blank, "Taxable amount of Roth IRA conversions". Shouldn't our Roth Conversion amount be in this box and not line 8, "Taxable amount not converted to Roth IRA", where the amount was placed? I double checked the 1099-R with what was entered in the program, and it all matches. The distribution code used is "7". I didn't see any other choices that would fit this entry.

Thank you for the help!

Dave

ThomasM125

Level 15

Normally if your tax due is less than $1,000 you won't be subject to a late payment of tax penalty. However, that is assuming you make your necessary quarterly tax payments on time. I suggest you complete the underpayment penalties section under Additional Tax Payments in the Other Tax Situations menu in TurboTax to see if the penalty can be reduced or eliminated.

The taxable amount of the ROTH IRA conversion should be in box 9 on the Form 1099-R Summary worksheet. I suggest you review your Form 1099-R entries and make sure you indicated that you moved the money to another retirement account, that you did a combination of rolling over, converting, or cashing out the money, and that you entered the amount converted to a Roth IRA account on the screen that says What Did You Do With The Money from (name of broker):

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dlf101863Author

Level 2

Thank you so much for the information. I really appreciate your help!

Dave

fd65

Level 2

Have called into Truman tax but can not get an answer on why a penalty is coming up for my IRA. Looks like a bug in the online software. Can you help out?