I entered all my tax info and TT said that I had a $25 penalty for underpayment of California taxes. Then it asked if I would like to enter more info to see if the penalty could be waived, I clicked Yes.
It then asked for a my AGI by quarter (AGI is non-trivial so I skipped it). It asked for another number by quarter (income maybe?) that I didn't have either. Finally it asked for my withholding by quarter, that I had.
After entering it TT said, sorry, you still own an underpayment penalty of $293.
Whoa! So I went back, back, back, to the beginning and tried again.
After entering the info again TT said, sorry, you still own an underpayment penalty of $464.
I went back and clicked the box to let California calculate the penalty and bill me.
Needless to say, I think there's something wrong here.
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If you want to see if you can reduce or eliminate a tentative penalty that TurboTax has calculated based on what you have entered so far, you can do that in the Underpayment Penalty section. It's entirely possible that the additional information you entered actually served to increase the penalty, in which case you decided to let California calculate it instead, which is perfectly appropriate.
When you get a statement from California, you will have the opportunity to dispute their calculation of the penalty or provide more information if you disagree.
Please see the California Instructions for Form 5805 for more information about the way California calculates the penalty. TurboTax follows these instructions.
Thank you for the response, but it doesn't explain the dramatic increase in the calculated penalty the second time around. And if nothing else, the use of the word "still" is incorrect if the penalty amount is changing.
TT: You owe a $25 penalty
Me: Enter data to try to reduce the penalty
TT: That doesn't reduce it, you still owe $293
Me: Reenter the exact same data a second time
TT: That doesn't reduce it you still owe $464
So I'm letting California calculate it since their answer is definitive anyway, but I still don't trust TurboTax's calculation.
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