Federal Underpayment Penalty

[gregorydjones]

As of 1/26/2021 TurboTax tells me I owe an underpayment penalty.  The IRS website for form 2210 shows the instructions as "draft" and the form "under review".  So how is TurboTax calculating a penalty already?

TurboTax is showing a tax underpayment of $497 which is below the $1,000 threshold which suggests the penalty ($67) is being determined by late payment of taxes.  Is TurboTax considering that the government delayed Q1 and Q2 tax payments to 7/15/2020?  I overpaid my Q1 and Q2 tax payments on 7/14/2020 to cover Q3 and paid Q4 taxes on 1/14/2021 which is on time.  I do not understand the penalty calculation.  Please advise.

[DianeW777]

To clarify, the amount of tax owed does not have a penalty if the total tax shown on your 2020 return minus the amount of tax you paid through withholding is less than $1,000. This does not include any estimated tax payments you might have made.  If the amount owed is because of estimated tax underpayments, the $1,000 rule does not apply.  If you find that this does apply to your, then you should check the box for IRS to calculate the penalty and complete your return. 

Due to the dates changes and exceptions allowed for COVID-19, you can choose to check the box to let the IRS calculate your penalty instead of adding it to your tax return. (see images below)

If you choose that and then change your mind you can go back to adding the Form 2210 calculations by using the following steps.

• With your TurboTax account open search (upper right) for underpayment penalty > Enter > select the Jump to link in the search results.
• Follow the prompts to change your original entry ( this will allow you to choose Let's Figure it Out