Why do I owe an underpayment penalty?

[JulieR · Accepted solution]

Generally, an underpayment penalty will apply if your return shows you either owe $1,000 or more in tax after subtracting your withholding and refundable credits, or if your withholding and estimated tax paid is not at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.

If you don't want TurboTax to calculate the penalty then you can go through the interview section for Underpayment Penalty and there is an option to remove the penalty and have the IRS calculate the penalty instead (they will send you a bill for it).

To do this:

1. Open your return in TurboTax, if you aren’t already in it. To do this, sign in to TurboTax and click the Take me to my return button.) 

2. Search for Underpayment Penalty, then select Jump to underpayment penalty, then follow the prompts to complete the process. 

[mhnpdl]

Hi,

I had underpayment penalty of 40$ for 2020. It was never pulled from direct ACH payment and neither turbotax added while paying in full amount to IRS. Also, IRS dint still sent me bill or notice.

How do people pay underpayment penalty ? is that separate route or form or paid while paying owed tax.