Estimated Payment ?

Forum|Forum|6 years ago
May 6, 2020
3 replies
31 views

I am retired, not self-employed, nor have I ever had to make estimated payments to federal, state or local jurisdictions. With the tax dedlines and taxes due dates moved to July 31, Why am I receiving a TurboTax message saying that $125 is being included in my taxes due (federal) "for underpayment of estimated taxes?" What do I need to do about it?

DavidS127

Level 13

First, note that the filing deadline has been extended to July 15, 2020.

For some reason, TurboTax is "seeing" lots of taxable income but no taxes paid during the year for that income.

Check the entry of any of your tax forms that report income (e.g., SSA-1099 and 1099-R) to make sure you entered the correct income amount and that any income tax withheld has also been properly entered.

Next, go to the underpayment penalty section of TurboTax and make sure you entered your prior year tax and income where requested. Click on the Search icon on the top right, enter "underpayment penalty" in the search window, and then click on "Jump to underpayment penalties".

Another technique that can reduce or eliminate an underpayment penalty, when your income increased substantially in the last half of the year, is to use the "annualized installment method". TurboTax will offer you this option in the "underpayment penalty" section.

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Hal_Al

Level 15

"nor have I ever had to make estimated payments"

If you had no withholding and made no quarterly estimated payments and you owe more than $1000 at tax filing time, you are subject to an underpayment penalty. The underpayment penalty is not to be confused with the late payment penalty. Extending the payment date to July 15 only applies to the late payment penalty.

VolvoGirl

Level 15

Do you owe more than $1,000 tax due? You might be able to eliminate it or at least reduce it. You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you. It's form 2210.

It's under
Federal or Personal (for H&B version)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button

If you have the desktop program you can switch to Forms Mode (click forms in the upper right (left for Mac)) and open the 2210 form.

ps....I had a refund once and still had a penalty for not paying in evenly during the year.