Estimated Tax Penalty

[Eli1977]

My income is unpredictable (and no W-2s) so I usually pay estimated tax based on 100% of the previous year's total tax to avoid any penalties. Have never had a problem before.

This year I'm using TurboTax and they've added an Estimated Tax Penalty on line 38 of my 1040.

All of my estimated payments were made on time. Altogether I paid slightly more than 100% of previous year.

So how are is TT calculating a penalty?

I don't think TT ever asks for the amount of tax I paid in the previous year, so do they just ignore the IRS provision I've been using for years? Or am I missing something?

[MonikaK1]

If TurboTax is showing an underpayment penalty on your return, visit or revisit the Underpayment Penalty section under Other Tax Situations and answer the interview questions. The penalty calculation may change based on your answers, including information about when your withholding was applied. In addition, if you believe you qualify for a waiver of the penalty, you can request a waiver in that section.

The IRS may reduce an underpayment penalty if any of the following apply:

• You or your spouse (if you file a joint return) retired in the past 2 years after reaching age 62 or became disabled and you had reasonable cause to underpay or pay your estimated tax late. See Waiver of Penalty in Instructions for Form 2210PDF.
• You had most of your income tax withheld early in the year instead of spreading it equally through the year. 
• Your income varies during the year. Complete Form 2210, Schedule AI, Annualized Income Installment Method PDF(found within the form).

The penalty for underpayment of estimated tax can also be removed to the extent that the underpayment is the result of a casualty, local disaster, or other unusual circumstance such that it would not be fair to impose the penalty.

See here for information about different TurboTax tools you can use to calculate withholding and estimated taxes