Federal Underpayment penalty

[PatF]

TT calculated a $46 penalty for underpayment of federal taxes.  The feds sent me a letter saying I owed over $160, so I still owe $123.  Not a big deal, and I understand that I can report income quarterly over the year, but I prefer to just pay the penalty than to have to get that precise with my info, plus I tend to start payments in the May/June timeframe, so I don't have an issue with the penalty.  However, I enter all my information into TT including the dates of my estimated tax payments and go with the penalty calculated by TT, so I don't understand why TT would not be calculating this correctly.  I trust TT and have used it for at least 15 years now, and this is the first time I've had a calculation corrected by the feds.  Going forward, now I can't trust that the penalty is being calculated correctly by TT.  Suggestions?  Thanks.  And by the way, I think TT is one of the best software applications anywhere, and has been for a long time.

[VolvoGirl]

The penalty on 1040 line 38 is just an estimated amount.  Turbo Tax can not figure it accurately because they don't know exactly when the IRS or state will get your return and tax due payment.  It's very common and normal and expected for the IRS or state to bill you for more or send you a refund.

[Mike9241]

do you mail in estimated payments or use Direct Pay or EFTPS? mail is a little iffy becuas ethe iRS goes by postmark or at least it supposed to while with the elctronic funds payment there should be no reason for a difference (unless done on a non-business day) 

[PatF]

Thanks - that's good to know it's an estimate.  I always get my return and payment sent in at least a few days prior to April 15, so if that's the reason for the discrepancy that makes sense.  It doesn't make sense that it would be over $100 difference on a $4000 payment if it's just a day or two later than the 15th though.

[PatF]

Everything is by ETF.  And I submit my Federal return electronically.  So from both of your responses, there really isn't an explanation yet.  The solution to this of course (I hope) is to get my estimated taxes paid in full every quarter.  It's also good to know that it's not uncommon to get a check or bill back for a few bucks.  I know for my state taxes, I routinely get a check back of have to make a payment for a couple dollars most years.  That is understandable.  This is the first year I've owed anything related to underpayment of the penalty.  I'm pretty sure that all my dates on the payments submitted on my tax forms are correct, and all of that is done electronically and by ETF.  And my federal estimated payments, which is ALL of my federal payments, are done via Direct Pay.

[Opus 17]

---

@PatF wrote:

Thanks - that's good to know it's an estimate.  I always get my return and payment sent in at least a few days prior to April 15, so if that's the reason for the discrepancy that makes sense.  It doesn't make sense that it would be over $100 difference on a $4000 payment if it's just a day or two later than the 15th though.

---

You are supposed to make quarterly payments to stay on top of your tax bill, not owe a large sum when you file.  If you owed $4000, that means the IRS will consider that you were $1000 short as of April 15, 2022; $2000 short as of June 15; $3000 short as of September 15; and $4000 short as of January 15, 2023 (since those are the dates when the quarterly payments were due).

https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-form-2210/L2z0haVWb

I don't know why there would be such a discrepancy between the IRS calculation and Turbotax, you can look at your copy of form 2210 and see how the estimate was calculated