topic Form 1040 Safe harbor for 2020 Tax year in Deductions & credits

Form 1040 Safe harbor for 2020 Tax year

rocky471 — Fri, 19 Mar 2021 04:33:06 GMT

Turbo Tax Premier seems to ignore the Safe Harbor Rule (pay 100% of previous year's tax) when calculating tax. I clearly qualify, the two year summary shows my 2019 numbers, yet TT simply calculated my tax including a penalty.

What am I missing?

Re: Form 1040 Safe harbor for 2020 Tax year

ColeenD3 — Sun, 21 Mar 2021 17:09:08 GMT

Here is one possible reason.

Penalty figured separately for each required payment.

The penalty is figured separately for each installment due date. Therefore, you may owe the penalty for an earlier due date even if you paid enough tax later to make up the underpayment. This is true even if you’re due a refund when you file your tax return. However, you may be able to reduce or eliminate the penalty by using the annualized income installment method.

Penalty

Re: Form 1040 Safe harbor for 2020 Tax year

rocky471 — Sun, 21 Mar 2021 18:41:08 GMT

Thanks ColeenD3

After a bunch of digging around I found that I could fill out form 2210AI in the forms view and make the penalty go away since my payments each quarter were commensurate with the taxable income for that quarter. It would be helpful however if the step-by-step view of TT, in the spirit of "We will get you the biggest refund", at least had a suggestion along the lines of "You currently owe a penalty of $XXX. You may be able to reduce the penalty by using the annualized income installment method. See NNNN for details".

Even better would be an option in the step-by-step mode to populate 2210 and 2210AI