topic Re: Underpayment Penalty in Get your taxes done using TurboTax

Underpayment Penalty

mpsingh08 — Tue, 08 Oct 2019 03:37:05 GMT

If all my sums are only lump-sum for the year, will TurboTax miscalculate my underpeyamnt penalty? If yes, what should I do to get the correct underpayment penalty?

Re: Underpayment Penalty

VolvoGirl — Tue, 08 Oct 2019 05:01:04 GMT

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

And even if you or Turbo Tax adds it on line 23 it is only an estimate. It's common and expected for the IRS to bill you for more depending on when they actually get your payment. Or even send you a refund for some.

Re: Underpayment Penalty

mpsingh08 — Tue, 08 Oct 2019 05:44:49 GMT

Thanks!

Re: Underpayment Penalty

Anonymous — Tue, 08 Oct 2019 05:49:07 GMT

what do you mean by my sums are only lump-sum for the year

there are two ways to calculate the underpayment penalty. the first assumes your income is earned equally throughout the year and so is your withholding unless you enter you actual withholding (in PART II of 2210 check box D) and enter actual withholding below. any estimated tax payments use the date you entered for payment. if blank then the due date is assumed.

there is also the option to figure your tax penalty using the annualized income installment method where you have to use your actual income and expenses for the periods listed at the top except the entire year column which is automatically populated. in part II of 2210 check box c and use the quickzoom.

Re: Underpayment Penalty

cleverley — Mon, 27 Jan 2020 19:40:00 GMT

Thanks!

Re: Underpayment Penalty

AmyC — Mon, 27 Jan 2020 19:53:14 GMT

The annualized method is great to use if more of your money was made near the end of the year. The IRS is looking for you to pay your taxes as you earn the money, each quarter. If most of the money is made in the last quarter, it is a little more forgivable.

Anytime you get a lump of money, stocks, house sale, business income, etc, the IRS expects you to make an estimated payment. Here is a link on help with estimates for moving forward.

If you need more help, please reply.

Re: Underpayment Penalty

nellielld — Tue, 14 Apr 2020 19:12:10 GMT

I'm sorry but my TurboTax is not asking me any questions to see if i don't need to pay any penalty. I paid twice as much in taxes in 2019 than in 2018 but i'm still being told I owe a penalty because I can't find where to enter 2018 tax liability.