I file my taxes as Trader and my income is uneven and I only know about full taxes and estimated payments by Aug/Sept as I have to file late due to K3.
My overall tax payments were little more than estimated tax (110% of last year tax) but to un evenness, TT is showing 2210 Penalty. As a matter of fact IRS was sitting on my refund which I only got in Dec 2023.
Can I avoid this penalty and how with Turbo Tax software?
It depends. You can use it this year and make more of a point to not underpay in the future. This is not a once in a lifetime use thing, depending on circumstances, it is possible that you could request the abatement in the future, but not every year or even often. But it is not a one time use forever thing.
the default is that 1/4 of your annual taxes are due each period. if you don't pay estimated taxes that way, the only option that might reduce your penalties is the Annualized Income Installment Method on page 3 of the 2210.
Thanks but HOW?
Page 3 of Form 2210 would be big PAIN. It is asking me AGI by 1st quarter, 1st half, first 2/3 and then whole year.
Basically I have to calculate my tax return by quarter.
Let me ask other way
Can I ask for First time waiver?
Since IRS had my refund which I only got in Dec 23 so ask to waive this penalty? Can it even be done via Turbo Tax?
You can file Form 843 to request a first-time abatement of penalty. This may work if you have a good history of timely payments and have a reasonable argument as to why your tax was paid late. You can use this link to learn more IRS 1st Time Penalty Abatement
If I have ONE life line, should I keep it for other time let say where penalty is Large and pay small penalty on my own.
How does it work? If I have one time penalty of less withholding tax, would I loose argument of timely payment history? or depends
I think this will be First year ever I will be paying late estimated tax penalty and it is small one.
It depends. You can use it this year and make more of a point to not underpay in the future. This is not a once in a lifetime use thing, depending on circumstances, it is possible that you could request the abatement in the future, but not every year or even often. But it is not a one time use forever thing.
If I file form 2210 asking for abatement of penalty, how does this work.
Would IRS send you a letter either approving or disapproving it or either you get refund check or no news?
How long does it takes to get refund for under payment penalty?
If I file form 2210 asking for abatement of penalty, how does this work.
Would IRS send you a letter either approving or disapproving it
certainly if disapproves because you'll be getting a bill or smaller refund. not sure what it does if approved. you'll know because you should get your full refund unless there are other issues but then you would also get a letter or notice
or either you get refund check or no news?
How long does it takes to get refund for under payment penalty?
no waiver requested - on average the irs says 21 days but it can be more or less. for waiver that would need to be reviewed by an agent/supervisor for approval. so how long that might take is unknown