turbotax calculating a Virginia underpayment penalty but VA owes me a refund!

[deb_grod]

how is this possible?

[SteamTrain]

That can happen if you made estimated tax payments at the end of the year, and not 4 equal payments over the course of the year....but if you received extra income at the end of the year, and made a payment to cover it, the penalty can usually be reduced or eliminated by going thru the annualized income calculations.

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The automatic "initial" calculation's that are done, will assume that any income is received evenly over the year....thus, someone getting large late-year income (perhaps Mutual fund distributions, or a large bonus) might make an estimated payment to more than cover it (thus a refund)...but the initial penalty calculations spread the income over the year and that ends up showing you underpaid taxes in the first 3 qtrs...so, to eliminate the penalty, you have to do some extra works to show exactly when you received the income during the year...thus the annualized income calculations....but they are a pain to o, and take meticulous re-recreation of everything for the year...if penalty is less than ~$50, I wouldn't bother.  I've done it once and won't again unless the penalty gets onerous.

[TomK_VA]

I'm getting the same thing ($1 underpayment).

I am retired, made all four estimated tax payments on time, no unusual income, and am getting a refund.

Something is weird here.

[JotikaT2]

In addition to what SteamTrain explained above, you can also try to reduce your underpayment penalty by following the tip at the bottom of the link below.  

Underpayment penalties

[TomK_VA]

Appreciate the comments made so far but this still makes no sense that I can see in my case. 

•  I had no year end jump in income

•  My Va tax was $877.00

•  My annuities withheld $566 leaving a tax burden of $321

•  My four Estimated Tax payments were all $124 and all on time leaving a surplus (overpayment) of $175 (which is my refund calculated by TT.

I think there is something deeper here, unless I am simply not understanding something.

[SteamTrain]

I don't know if VA is doing it the same, but NC used to calculate an initial penalty for taxes owed too

...BUT...#1...the initial penalty calculation only considered Withholding, and not the estimated payments. Thus, since you owed more than $150 BEFORE using the estimated payments, there was a penalty applied.

...BUT..#2...there may be a secondary calculation procedure in the VA State interview section "Other Situations" , where you enter that section and look for the "Underpayment"  menu line.  Go in there and there is likely a way to get those quarterly estimates included in the secondary calculation that removes the penalty...at least that's what I used to have to do for my NC tax return.......and the was very little else, other than checking a box in the Underpayment interview to include the estimated payments in the penalty calculation when I wen into that state underpayment section......but that was NC,....and no, I can't know what VA does.

[TomK_VA]

OK, I've found the problem.  When I entered the dialog to input the estimated taxes paid, the dates were already filled in.  I didn't pay attention to that and wrongly assumed they were correct for each quarter. 

Virginia's payments are due the 15th of April , June, and September of the current year, and the 15th of January the following year.

TT prefilled the boxes with July 15th, July 15th (again), September 15th, and January 15th.

Once I corrected this, my "underpayment" disappeared.

(note: to change the values it is done in the Federal tax section) 

[SteamTrain]

.....heavens yes...never use any default payment dates, in either the Federal or State estimated payment entries …...the exact dates you paid can become very  important for other issues besides the one you discovered.

[TomK_VA]

Agreed. 

For what it's worth, it was correctly populated in the 2019 version.