Can I manually adjust my NJ 2210 form for underpayment penalty calculation

[jman3]

My NJ state return had an underpayment penalty that was added based on NJ form 2210. When I opened the form, I noticed that the program did not have accurate numbers from my 2021 NJ return in line 4b and line 15 (NJ tax total in 2021). Can I manually edit those numbers in the form using my 2021 filed return? If I do that, the new calculations show no underpayment penalty, but I wanted to make sure first before I manually change it. I was not sure where the original numbers came from that the program was using.

I also read the following on the NJ Treasury website about underpayment amounts for those making over $150,000 (https://www.state.nj.us/treasury/taxation/esti.shtml). Does this information impact how I should adjust form 2210 or any potential penalty calculations?

Thanks!

[fanfare]

If TurboTax lets you put an amount there, and you enter the correct amounts, there will be no problem.

@jman3 

[JosephS1 · Accepted solution]

Based on your question, it would appear you are using TurboTax Desktop to enter your data and file your return.  The screens below correspond to the items you are referring to:

Line 4b for your 2021 Tax:

The software does indeed allow you to enter the amount that was showing on Line 49 of your NJ-1040 2021 return.  Entering the correct number here, even if overriding what TurboTax brought forward, will not affect your guarantee for accuracy as most manual entries would.  It presupposes that perhaps the latest version of what you filed was not showing in TurboTax or you did not use TurboTax in the prior year and therefore, allows you to enter a manual entry.  Just be certain it is the actual number from the return that was filed.

Line 15, shown below, is to enter the tax shown on Line 49 and what you previously entered on Line 4b above.  This is to calculate any exclusion you may be entitled to to avoid an underpayment penalty.  If you wish to annualize, that option is also available but simply entering the amount where indicated on Line 15 would suffice to avoid the penalty.

The link you refer to is fairly plain.  Not being able to see your return, if your current year withholding and/or payments equals 110% of last year's tax then the safe harbor NJ refers to is met and no penalty would be assessed.  However, as the rule goes on to say, the Division of Taxation will impose estimated tax penalties and interest on an underpayment of estimated tax only on the difference between what was actually paid and either 100% of last year’s tax or 80% of the current year’s tax.  Chances are, and this is without being able to see your actual return, that you would qualify for the safe harbor under one of the above rules.

@jman3 

[1597980]

I owe a lot of tax to NJ for 2022 due to capital gains from the sale of rental property at year end. I didn't know I needed to make estimated payment. Do I need to calculate interest on the underpayment of estimated tax? I spoke to someone at TurboTax and was told I don't need to if TurboTax didn't calculate for me.  But looking at NJ-1040 instructions, I think I should.  If so, how do I do this?  I didn't get a question on this as I went through the interview process for NJ 1040.  

[fanfare]

TurboTax, and other tax software, calculates the Estimated Tax Penalty.

If it shows zero, you don't owe a penalty.

This can happen based on what you filed last year.

Did you use Turbotax last year and import your return into 2022 ?

[1597980]

I did use TurboTax and my Federal tax due for last year was automatically imported when Federal penalty was calculated.  NJ instruction says installment interest "may be" charged if my total tax is more $400 and I didn't pay at least 80%.  I met both criteria.  Note that I'm NOT talking about penalty.  I'm talking about interest on underpayment (line 52 of NJ 1040).  If required, I'd like to pay sooner rather than later as the interest rate is very high and compounds quickly.  Is interest assessed starting from 1/15/23 when estimated payment was due? Or as long as I pay tax due prior to 4/18/23, I don't owe any interest?  

[MonikaK1]

New Jersey’s Income Tax is a “pay-as-you-go” tax. You must pay the tax as you earn or receive income throughout the year.

If the balance of tax due with your return is more than $400, and you did not pay your required estimated payments, you will be charged interest on the underpayment. This is true even if you pay all the tax due by the return due date.

For estimated tax purposes, the year is divided into four payment periods, each with a specific due date. If your estimated payments are made late, interest charges will be assessed from the due date of the payment(s) to the actual payment date(s). Interest is assessed at the annual rate of 3% above the prime rate.

Please see this New Jersey webpage for more information.

[1597980]

I e-filed my returns on 4/15.  My Federal and NY returns were accepted the same day and taxes due were debited from my account already.  However, my NJ return is still pending.  It's now past 4/18.  I'm beginning to get worried.  What is the problem?  I saw that TurboTax says it's fine as long as I transmitted before the deadline but it also says it typically takes 24-48 hours.  Now it's way beyond 48 hours.  How do I prove that I filed on time if NJ says I'm late?

[AmyC]

Your return will either be accepted or rejected. If rejected, you can correct the error and file again within 5 days of the due date or mail your return with the rejection notice. The state knows they have a big queue. No need to worry at this point. Since Fed and NY were accepted, your odds are good for acceptance.

[1597980]

Thanks.  When you say "file again within 5 days of due date", is the "due date" a new date given or 4/18/23?  Does TurboTax know why it's taking so long?  In my experience, NJ usually takes a day longer than Federal but this time it has been 4 days!  If the delayed acceptance is due to a long queue, would they be able to tell when I actually transmitted my return?  I just don't want to be considered filing late and then having to deal with it when I actually filed several days before deadline.  

[DawnC]

The due date is still 04/18/23, so a rejected return that was submitted before that can still be processed as 'on-time' until 04/23/23.   @1597980 

[fanfare]

"Is interest assessed starting from 1/15/23 when estimated payment was due? "

New Jersey:

for each of the four periods, if you are late, interest is charged on the number of days you are late.

for the fourth period amount due on 1/15/23 the interest is annual 10% x number of days / 365

Note; a late third period  payment will count towards your fourth period.

the tax software will do the calculation when you enter the date you made each payment.

@1597980 

[1597980]

What if I don't hear from them until the 23rd?  Is there anything TurboTax does to verify what is causing the delay?  I read in some posts that TurboTax reviews our filings before submission?  I just don't want a late filing penalty and this is getting very stressful.