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It's not for filing or paying late. It doesn't have to do with last year's tax return or not paying estimates for this year. The penalty is an "estimated" amount. It's a penalty if you owe too much or for not paying in enough withholding during the year or not paying in evenly. Even if you are getting a refund you can still owe a penalty.
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 Home & Business Desktop)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button
TurboTax Premier is doing the same thing to me, too: Calculating a penalty because I made the first three quarterly estimates in October 2025 rather than in April, June and September. Very frustrating. TT may say they are only "estimating" penalty rather than a "calculating" or "assessing" penalty. But the fact is that the TT software should not do this and should not add it to the return. The IRS granted these extensions -- and announced them in January 2025, and the TT software should be able to correctly reflect this. After all, users count on TT to correctly determine our taxes. Essentially, TT 2025 does not work correctly for the millions of people in Los Angeles County, and presumably everyone in all other areas of the country with similar disaster-related extensions.
That seems to work, but users should not have to go through extra steps (and figure out on their own what steps to take) in order to have a TurboTax return that does not show a penalty due. TurboTax software should already recognize IRS extended deadlines for residents covered by these types of IRS extension grants, and therefore automatically recognize that these quarterly estimates were not paid late.
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