Internal Revenue Code 6654

[cruisefor2]

For Tax Year 2024 I was charged a penalty based on "Failure to pay proper estimated tax".

For purposes of example my Total Tax was $8,000...my total payments for 2024 (Tax withheld, Estimated tax payments, and Amount Owed as calculated by TurboTax) = $9,000.

I believe penalty owed was in error as my Total Tax was less than my Total Payments...what am I not seeing ?  

[SharonD007]

Assuming that you are referring to an underpayment penalty. The federal tax system is a pay as you go system.  As you make money, you have to pay taxes on that money. You may have an underpayment penalty if you didn't have enough taxes withheld from your income throughout the year or if you're self-employed, you didn't pay enough estimated taxes.

You can get hit with an underpayment penalty in the situation you described because you didn't pay the estimated quarterly taxes when they were due. The IRS imposes an underpayment of estimated tax penalty based on the amount, timing, and interest rate of the underpayment. 

To try to reduce or eliminate it, review the TurboTax article Why am I getting an underpayment penalty?

For more information, refer to the TurboTax help article Guide to IRS Tax Penalties: How to Avoid or Reduce Them for tips to use in the future.

You can contact the IRS to request a one-time abatement of your underpayment penalty. For individual tax returns, call 1-800-829-1040, 7 AM - 7 PM Monday through Friday local time.

Refer to the TurboTax article IRS Tax Penalty Abatement and Relief for more information.