2023 TTax Premier - form 1040 - line 34 shows overpayment of $540 but line 38 shows estimated tax penalty. My county in California was allowed by the IRS for delaying paying estimates last year. I paid per their revised schedule. Why is there a penalty?

[MonikaK1]

Penalties and associated interest are calculated by TurboTax but get waived (eliminated) as long as the new, post-disaster dates are met. 

Form 2210 can be used as a worksheet and doesn't need to be filed with your tax return in many cases. It can be used to determine if there is a penalty and you may be able to leave Form 2210 off your return and have the IRS calculate your penalty and send you a bill if there is one.

The top of the form includes a flowchart to help taxpayers decide who must file the form. If you fall into one of the following categories, you're required to figure out the penalty yourself and attach Form 2210 to your tax return:

Those requesting a waiver for part of their penalty

In addition to the rules mentioned above, there are a few other ways to have your underpayment penalty waived:

• Age 62 or older and retired or disabled. If you're age 62 or older and retired or disabled, you can ask to have your penalty waived for reasonable cause. Reasonable cause includes financial hardship or losing your physical or mental control over your faculties.
• Circumstances beyond your control. If you experienced an unusual event that prevents you from making estimated payments, you might qualify for an underpayment penalty waiver. Examples of qualifying circumstances include a grievous illness, damage to your home in a disaster, or fleeing domestic violence.
• Federally declared disaster. If you live in a federally declared disaster area, you qualify for an automatic underpayment penalty waiver.

If you're requesting a penalty waiver due to any of the above situations, enter the amount you want to be waived in parentheses on the dotted line next to line 19 (tax year 2023 form). Subtract this amount from your total penalty and enter the result on line 19.

See this TurboTax article for more information about Form 2210.

[oldmankingsfan]

Thank you. I think I found at least part of the problem. If you lived in certain counties in California, both the IRS and the FTB allowed the following for paying taxes (including estimates) in 2023: the due dates for 1st, 2nd and 3rd quarters were delayed to October 15, 2023. I entered the actual date I paid (October 4th) and the total paid. In digging into fed return, I found TTax completed form 2210 - Underpayment Penalty. It calculated penalty based on not making 1st-3rd Q payments until October. This appears to be an unfortunate glitch for California filers. Not sure how to proceed. I am thinking I will need to file Form 2210 AND request a waiver for the entire penalty amount.

[MonikaK1]

As stated in my previous reply, penalties and associated interest are calculated by TurboTax but will get waived (eliminated) as long as the new, post-disaster dates are met. The tax agencies - both the IRS and the California Franchise Tax Board - have promised penalty relief for those who qualify, but this was an administrative decision and does not change the law. This is why the penalties still get calculated - the tax software companies still have to follow the law.

If you get a notice from the IRS proposing to assess the penalty, see this IRS webpage for guidelines and next steps.

The Franchise Tax Board's website states that, if you are an affected taxpayer who received a bill for a late filing penalty or late payment penalty relating to a due date that fell between December 27, 2022, and November 16, 2023, and you timely filed your return and paid your tax by November 16, 2023, you should contact FTB to have the penalty abated.