I'm receiving a tax underpayment warning for my 2025 Illinois State Tax return. The tax liability being presented does not include the 4 estimated quarterly tax payments made for the 2025 tax year. I have a refund due when the estimated tax payments are considered. Why am I being alerted to a potential underpayment? Is this a calculation bug or? For now, I'm going to skip the annualization method and take the let Illinois figure out any penalty (if any) to expedite my tax return.
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Depending on all of the applicable facts, it's still possible to have an underpayment penalty even though you are receiving a refund.
Also, each state's rules may be different. For Illinois, if you:
Check to see whether all of the state estimated payments were entered. Navigate to the estimated tax payments section:
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