2019 I received a $128 state refund, this year turbotax is stating an underpayment of $10 occurred in 2019 for the state. How is this possible?

[tbl1944]

I used Turbotax both years, I don't understand how a refund was calculated last year and now it's showing an underpayment occurred.  Taxes weren't changed for 2019.

[MarilynG1]

It is possible to have an underpayment in 2020, even though you got a refund in 2019.

If you are a W-2 employee, your employer may have withheld less tax this year than last year, due to Payroll Withholding changes.

Compare last year's W-2 with this year's W-2 for the amount of Federal Tax Withheld.

You may qualify for an Exception to the Penalty.

To visit the section where you can go through possible exceptions to the penalty, follow these steps:

• Login to your return and click "Take Me To My Return"
• Click "Search" in the upper right corner of your screen, then type "underpayment penalty" in the Search Box and click "Find"
• Click the "Jump To" Link
• From here, you can review the underpayment penalty and work through the possible exceptions

Click this link for more info on Underpayment Penalties. 

[tbl1944]

Marilyn

I don't believe I made my question clear.  In 2019 I received a state refund of $128.  When doing my taxes this year, it is now stating I have an underpayment of $10 for 2019.  How could I have an underpayment for last year when I received a $128 refund?  Why is Turbotax now finding an underpayment for 2019 when I'm working on my 2020 taxes?

Thanks

Tami

[VolvoGirl]

No.  Turbo Tax can't know if you have a penalty or know anything about 2019.  We are working on 2020.  What is the exact message?  Can you post a screen shot of what it's telling you?  Has to be for 2020.

[tbl1944]

I'm using TurboTax Premier 2020.

Thanks

Tami

[VolvoGirl]

The penalty is on your 2020 income and return.  It just looks at your 2019 tax to see if you have an exception to the penalty by paying in as much withholding for 2020 as the tax liability on your 2019 return.    Even if you have a refund on your 2020 return you can still owe a penalty for not having enough withholding taken out or by not paying in evenly during the year.  

[JohnW152]

TurboTax isn't stating an underpayment on your 2019 return. 

It's using last year's tax liability as a baseline for the amount of tax you'd have needed to pay in 2020.  That's what's triggering the underpayment penalty.

You must have a balance due on your 2020 return of $500 or more.  If that's the case, your withholdings and/or estimated payments this year must not have equaled or exceeded 100% of your 2019 tax liability. 

According to LINE 33 (Estimated tax penalty) in the Kansas 2020 Individual Income Tax Booklet: 

An estimated tax penalty may be due if the total of your withholding and estimated tax payments (lines 22 and 23) subtracted from line 19 is $500 or more. Complete Schedule K-210 to determine the penalty amount to enter on line 33. There are two exceptions: 1) if withholdings and/or estimated payments (lines 22 and 23) equal or exceed 100% of the prior year’s tax liability (line 18 from last year’s return) or, 2) if your withholdings and/or estimated payments (lines 22 and 23) equal or exceed 90% of this year’s total income tax (line 19).

[tbl1944]

JohnW152

Thanks for explaining the penalty.  Wish it was worded differently in Turbotax so I understood that originally.

Thanks

Tami

[schoneboomr]

Agreed Tami, I have the same situation exactly and it has taken me a while to understand.  Wording in TurboTax could be much better.