I used Turbo tax to file my taxes and received a penalty for not sending estimated taxes the first three quarters even though taxes were withheld on income for the first 3 quarters. I failed to use an annualized income method. I did a 401k rollover to Roth in December and paid the estimated tax on the rollover in the 4 quarter on time. I filed a 1040x but have received a notice that the “IRS can not change the tax penalty because it is based on the tax shown on the original return”.
I overpaid my total tax liability and got a refund. Is it legal for the government to keep the penalty money if I did an amended return of my taxes?
Thank you.
Penalties:
1040-x Line 16: Subtract any penalty from the amount you owe reported on original 1040.
Don't try to include, but ignore, any new or changed penalty.
IRS will calculate your new penalty on their own and will bill you or refund you
IRS wrote they can not give me the penalty back, they are keeping it.
did you comply with the above Instructions for Form 1040-X?
You may have to submit a second amendment.
For what year? For years after 2020 you still have time to file Form 1040-X with Form 2210 and Schedule AI (Form 2210) to annualize income and claim a refund. Tax years prior to 2021 are closed for refund.
Without Form 2210 and Schedule AI (Form 2210), your income is treated as having been received evenly throughout the year, resulting in underpayment of taxes for the first three tax quarters under these circumstances. Filing Schedule AI is needed to treat the income as received when actually received, reducing the required payments for the first three tax quarters.
Thank you very much for your response and please forgive my lack of understanding. I have the same issue with Annualized Income for my amended return for 2024. The issue I have is confusion about 1040-X and the recommendation for the entry for line 16. Turbo Tax Smart Worksheet on Form 1040-X above line 16 states:
B. Tax Paid on original return (not including penalties)
The answer presented in the message seems to suggest otherwise. Please help an old dummy with what to do with the penalty on the original return in filing 1040-X.
Thank you very much, in advance, for any information you can provide.
Line 16—Amount Paid with Extension or Tax Return
On this line, enter the total of the following amounts.
• Any amount paid with your request for an extension on Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return; or Form 2350, Application for Extension of Time To File U.S. Income Tax Return.
Also include any amount paid electronically in connection with an extension of time to file, but don’t include the convenience fee you were charged.
• The amount you paid with your original return, regardless of method. Also include any additional payments you made after it was filed. However, don’t include payments of interest or penalties, or the convenience fee you were charged.
Example. You are filing Form 1040-X to amend your 2024 tax return. You sent a check for $1,500 with your original return, reflecting a payment of $1,400 in taxes and a $100 estimated tax penalty/underpayment penalty. When completing Form 1040-X, enter $1,400 on line 16 (the check sent with the original return minus the $100 penalty).
https://www.irs.gov/pub/irs-pdf/i1040x.pdf
@GKS1225 Thanks for the question.