California Flood Tax Filing Postponement

[Perplexed in Los Angeles]

Today I completed and filed my 2023 federal and CA state taxes. We paid estimated taxes last year well before the extended October 16 deadline for those in flood ravaged (most) counties in CA.  But the final Turbo Tax forms filed show a penalty for late filing estimated taxes - some $99. Why?  How can I correct this apparent Turbo Tax error without having to refile or file for an adjustment (cumbersome)?

[MonikaK1]

If you have taxes due with your return, a penalty for underpayment of estimated taxes is calculated by TurboTax, and you paid estimated tax within the extended time period for California disasters:

Visit or revisit the Other Tax Situations section and review the Underpayment Penalty information to confirm it is correct. Go through the interview and follow the prompts; when you get to the Penalty Waivers screen, answer "yes" if you qualify for a disaster exception, then "yes" at the next screen to request a waiver of the penalty, in all or part. Enter the reason in the field provided.

If you live in a federally declared disaster area and met the special filing and payment deadlines for that disaster, you qualify for an automatic underpayment penalty waiver. Even if the penalty is calculated on the return, the IRS should not charge the penalty. 

See here for the IRS requirements for the California disasters for 2023.

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

Because the Federal and state extended filing deadlines are available only for individuals living in areas impacted by official disaster declarations during specified dates, the deadlines themselves aren't updated in the software. The tax agencies made an administrative decision not to impose the penalties for affected individuals, but since the law itself didn't change, tax software including TurboTax still calculates the penalties. 

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment, or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

See here for related information from the California Franchise Tax Board.

[Perplexed in Los Angeles]

Thank you so much for your comprehensive and authoritative response.  I am clearly eligible for the disaster relief penalty waiver and have not received (nor do I expect to) an IRS Penalty notification.  After my post, I went back into TT and found the area in which I could have (and should have) claimed and received the penalty waiver. It is really buried. Unfortunately I had already submitted my return and scheduled payment for the balance owed. I also determined that options exist - 1040X or 843 (less complicated) should I opt to claim an after-the-fact adjustment.  Hopefully, as you suggested, the IRS will in fact "automatically provide filing and penalty relief upon processing the return," ideally prior to the schduled payment date or failing that, shortly thereafter. 

I had expected that TT would have proactively asked the question as to whether or not the taxpayer lived in a disaster relief zone given the number of taxpayers impacted in 2022.  It did not. I only discovered the penalty after submission when I quick-scanned the actual schedules submitted and noticed the penalty as calculated by TT.

Thanks again!