TY2020 CA 5805 Underpayment Calculation with Annualized Method doesn't use proper extension date due to COVID

[bldtax]

Form 5805 for California calculating an underpayment penalty using the annualized method is not properly taking into account the extended 540ES deadline to July 15. I made a large 540-ES payment on July 15 to account for capital gains in May, but the 5805 worksheets are flagging me as underpaid for the quarter ending June 15 and assessing a penalty.

I'm hoping this is just a bug in the early version of the form.

https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/extensions-to-file-pay.html

https://ttlc.intuit.com/community/tax-topics/help/is-the-tax-deadline-delayed-what-to-[product key r...

[bldtax]

For now, TurboTax support is writing this off as the Forms not being final yet. This form will be final on Feb 11, 2021, so we'll see if the problem gets fixed.

[AmyC]

Yes, once the form is finalized, the software can be updated- usually within a day. The IRS has delayed and does not begin accepting returns until February 12 so we all have a long way to go.

[bldtax]

An update just happened on Jan 30 which made the penalty calculation even further incorrect. :(

The CA FTB has published the final 5805 and instructions some time ago, and I can see that Turbo Tax has the Payment Due Dates from the 5805 Instructions page 4 Worksheet II - Regular Method to Figure Underpayment and Penalty totally wrong. It has the first two installments due on 4/15/2020 and 6/15/2020, when they both should be 7/15/2020.

Why is TurboTax lagging so far behind what the CA FTB has already published?

[KathrynG3]

When I checked this in TurboTax Online and TurboTax CD/Download, I had a different experience than you did on Form 5805. I recommend deleting Form 5805 and first entering the details as described below. 

To delete a form in TurboTax Online:

• Go to the left menu and find Tax Tools
• Select Tools and Delete a Form
• Delete the following forms one at a time: 
  • Form 2210 in the federal return list 
  • Form 5805 in the California return list 

(Forms are deleted from the Forms view in the CD/Download by selecting Delete Form when viewing the form to delete. To find it, first highlight it on the left Forms in My Return.)

Next, return to the Deductions & Credits section and follow these steps:

• Under Estimated Tax Payments, find State Estimated taxes for 2020.
• At the How much did you pay in state estimated taxes? screen, the date paid will be prepopulated for 7/15/2020 for the first and second quarters.

The IRS assesses penalties and interest if either 90% of the current year tax or 100%(110% if your income is above $150,000) of the prior year tax were not paid. It sounds like you may be just fine with the July payment. In case you do need to add the underpayment forms, see this link for more information: How do I add Form 2210? 

Form 5805 will generate if you select Yes at the Underpayment Penalty section of the California interview. Otherwise, on your summary page for California, scroll down and click the Edit box by Other situations to return to Form 5805 for Underpayment of Taxes.

[bldtax]

Interesting -- I actually had to delete "5805 Wks II" to get things to look right. While the worksheet still lists the payment due dates as 4/15/2020 and 6/15/2020 for (a) and (b) respectively (when they should both be 7/15/2020 as can be seen on the actual worksheet on the FTB site), the penalty is now correctly eliminated.

Very annoying though that the automatic software and form updates didn't fix this, Manual intervention should have been unnecessary.

Thanks for your feedback.

[gtchen66]

I am still confused as to how to fill this out.  Instructions say to fill out the amount withheld for the first quarter (7/15/20), second quarter (7/15/20), third quarter (9/15/20) and fourth quarter (1/15/21).  Am I supposed to enter the amount withheld between 1/1/20 and 7/15/20 twice?