You might be able to eliminate it or at least reduce it. You can annualize your income and payments. 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 from 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
If you have the desktop program you can switch to Forms Mode (click forms in the upper right (left for Mac)) and open the 2210 form. If the 2210 doesn't show up in the left column, click on Open Forms at the top of the left column. Type 2210 in the search box and open the 2210 form. Check box C to let the IRS calculate it.
Hello, @7evin337557 !
Great work making quarterly estimated payments and keeping track of income for your business!
Can you give more details on the penalty? Is it an underpayment penalty? For federal or state?
Look forward to answering your question!
It always states underpayment but I always receive a refund.
Hi There:
Theoretically there should be no penalty if you are making timely estimated tax payments, (which is calculating your tax liability and and making a timely and appropriate payment). If you are already doing this, then it might be a situation of employing the annualized installment method to avoid estimated tax penalties. In the below link see annualized installment method.
Thank you. Quick follow up question. Do I continue making payments like always then? It states the annualized method selection is made during tax time, so I wanted to make sure I don’t do anything different as of now. Also, is there anything I can do to get the penalties back that I was charged for in previous years or is that long gone?