Turbo Tax is saying I have a $50 penalty for underpayment. I only owe $500...I thought the underpayment only applied if you owe more than $1,000? I converted an account to a Roth in the 4th quarter and paid a timely estimated tax that quarter...do I need to annualize or something?
No, you are talking about the need to pay estimated taxes. Underpayment penalties are incurred if you don't withhold or pay enough tax on income received during each quarter. Even if you paid your tax bill in full by the April deadline or are getting a refund, you may still get an underpayment penalty. See Why do I have a penalty? for a way to reduce or eliminate the penalty.
If I didn't convert it until the 4th quarter, how could I have paid the taxes in the other 3 (I paid an estimated tax for it as soon as I converted it)? Where is Turbo Tax getting $50 from (I think I saw somewhere it's 3% which would only be $15 for $500 due)?
"do I need to annualize or something?" Yes, annualization on the 2210 was made for your situation. Go back to your federal return, then go to Other Tax Situations, then Additional Tax Payments, then Underpayment penalties. I believe that you can access the annualization interview here.
Even if my total taxes paid for 2022 is more than 110% of my 2021 paid? I paid like 40K in 2021 and more than 60k in 2022.
It is estimated tax that has to be 100% ( 110% if your AGI is over $150,000) of prior year's tax.
That's the prior year's tax rule,
the other rule is the 90% rule: 90% of the current year's tax.
whichever is smaller, but still must be evenly spread.
@fanfare wrote:Form 2210 (default) requires equal estimated tax installments of 25%.
By this I assume that you mean in the absence of annualizing on Schedule AI. However, it's not entirely true. You could pay more in estimated taxes in earlier quarters and less in later quarters as long as you paid at least 25% for the first quarter, 50% for the first two quarters, 75% for the first three quarters and 100% for the year.