I live in Texas and my 2020 Federal Tax return is including a penalty. For Texans, filing deadline is extended to 06/17/2021.

[Samson11810]

How do you remove the assessed penalty before e-filing the Federal tax return.

[xmasbaby0 · Accepted solution]

You are not being assessed a late filing penalty---TurboTax does not assess late filing penalties.   If you underpaid your 2020 tax by not having enough withheld from various sources of income during the year then TT may be estimating an underpayment penalty ---so that is what you are seeing.   It is not a late penalty.   When the IRS processes your return they might decide to decrease or increase that  underpayment penalty.

[VolvoGirl]

If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.

You might be able to eliminate it or at least reduce it. You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you. It's form 2210.

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

If you have the desktop program you can switch to Forms Mode (click forms in the upper right (left for Mac)) and open the 2210 form. If the 2210 doesn't show up in the left column, click on Open Forms at the top of the left column. Type 2210 in the search box and open the 2210 form. Check box C to let the IRS calculate it.

[Samson11810 · Accepted solution]

Yes, this year I did underpay my taxes considerably.  Never realized there was a penalty for underpaying.  I thought you would just go into paying quarterly estimated taxes for the next year.  Thanks for providing that information.