topic Every yr we owe fed tax over $4000. This is the 1st yr we have an underpayment penalty of $1. Why? Will there be an IRS bill later calculating an amount for this penalty? in Get your taxes done using TurboTax

Every yr we owe fed tax over $4000. This is the 1st yr we have an underpayment penalty of $1. Why? Will there be an IRS bill later calculating an amount for this penalty?

kreweof2 — Mon, 05 Apr 2021 17:35:36 GMT

Re: Every yr we owe fed tax over $4000. This is the 1st yr we have an underpayment penalty of $1....

KathrynG3 — Mon, 05 Apr 2021 17:51:30 GMT

1. Actually, a penalty is calculated if the following conditions are not met:

The IRS requires taxpayers to pay tax as the income is earned, either 100% of the prior year tax or 90% of the current year tax to avoid penalties and interest. (For taxpayers with adjusted gross income greater than $150,000, these percentages are 110% and 100%, respectively.)

2. It depends. There is an option in TurboTax to calculate the penalty and send it with your return or have the IRS calculate it.

For more information, see:

How do I add Form 2210?

Why is my Form 2210 not calculating lines 18-26 correctly?

Re: Every yr we owe fed tax over $4000. This is the 1st yr we have an underpayment penalty of $1....

kreweof2 — Thu, 08 Apr 2021 12:41:54 GMT

We have never paid an underpayment penalty. Our federal taxes are taken out each paycheck. We've always used Turbo Tax. We've always owed at the end of the year. I don't understand why this year would be any different that we would now be assessed an underpayment penalty, which Turbo Tax says is $1.