We paid our North Carolina taxes in full on time using the amount specified by TurboTax.
We just received a $50 underpayment penalty. Why did we receive this $50 penalty if we had already paid in full? (The amount specified by TurboTax did include a $50 penalty, but the notice received from North Carolina Department of revenue specified an additional $50 Penalty.)
thanks for any help!
You'll need to sign in or create an account to connect with an expert.
Were you required to pay quarterly state estimated taxes throughout the year? If so, and even if your payments covered the full amount of tax liability when added up at year's end, if any one quarter was underpaid that can cause an underpayment penalty. I'm not saying that's what happened in your case--only describing one scenario where that can be seen. I don't know if the same is true for your state, but as an example, the Federal return has some "safe harbor" rules/exceptions and a way to annualize the income on the Federal penalty form to avoid or lessen an underpayment penalty. I don't know if NC has any of that or not. I'm a fellow user--not a tax expert--and a long way from NC.
If you have a copy of your state return with all the forms and worksheets, it may have a penalty form where that is calculated. That may give you a clue as to what occurred. A penalty figured by TurboTax is often subject to revision by the tax agency, since it doesn't always know exactly what specific date the payment is considered credited by the tax agency so may be calculating it differently. So occasionally the IRS or state will ask for more penalty, but even then, it might be avoided or lessened if one qualifies for one of the exceptions mentioned above.
Your NC letter may have contact info on it if you want to speak to the NC DOR. Otherwise, here's a way to find their contact page:
FAQ: How do I contact my state department of revenue?
You would have to contact NC taxing agency.
Were you required to pay quarterly state estimated taxes throughout the year? If so, and even if your payments covered the full amount of tax liability when added up at year's end, if any one quarter was underpaid that can cause an underpayment penalty. I'm not saying that's what happened in your case--only describing one scenario where that can be seen. I don't know if the same is true for your state, but as an example, the Federal return has some "safe harbor" rules/exceptions and a way to annualize the income on the Federal penalty form to avoid or lessen an underpayment penalty. I don't know if NC has any of that or not. I'm a fellow user--not a tax expert--and a long way from NC.
If you have a copy of your state return with all the forms and worksheets, it may have a penalty form where that is calculated. That may give you a clue as to what occurred. A penalty figured by TurboTax is often subject to revision by the tax agency, since it doesn't always know exactly what specific date the payment is considered credited by the tax agency so may be calculating it differently. So occasionally the IRS or state will ask for more penalty, but even then, it might be avoided or lessened if one qualifies for one of the exceptions mentioned above.
Your NC letter may have contact info on it if you want to speak to the NC DOR. Otherwise, here's a way to find their contact page:
FAQ: How do I contact my state department of revenue?
THANK YOU for taking the time to answer - MUCH appreciated!
What you say makes perfect sense. I will examine that “penalty form.”
Thank you again!
You're welcome. Good luck.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
MelGunz
New Member
rudys12
New Member
groganbrenda59
New Member
liawjy
New Member
brentmccar
New Member