Thought I would let you know what happened. I am not sure who is at fault but I did have to spend some time on the phone with Colorado Dept of Revenue to figure this out.
1) e-filed federal and Colorado with Turbotax online
2) I had annualized my Colorado estimated taxes.
3) I did not pay Federal estimated taxes because I knew the tax bill would be below $1000
4) Turbotax did file DR0204 which should have removed the underpayment penalty by showing the annualization amounts.
5) Colorado still assessed a penalty.
After calling the state dept of revenue, they said the penalty was because they needed to see form 2210 in my federal tax return to confirm my annualization. I don't believe Turbotax filed a 2210 since I was below $1000 in tax owed or did not pay federal estimated taxes. I don't see form 2210 in my print out of my taxes. Anyways they assessed a penalty because even though they had Form 0204, they did not have a federal 2210. After telling them what happened, the representative removed the penalty but could not guarantee that it would not undergo another review and I might have to supply a 2210 at that point.
