How and When to Pay Penalty on Missing Estimated Taxes

[evixdecz]

If I didn't pay any estimated taxes, how and when will IRS and state (CA) ask me to pay the penalty?

Will they send me some kind of bill?

Or will Turbotax takes care of it by including it into the total payments when I electronically file the taxes in April next year?

Thanks.

[Critter-3]

The TT program will compute an estimated penalty on the return then if the feds/state want to charge you more they will bill you later. 

You have not missed the last estimate due 1/15/2021 and you can always send in the third quarter payment now late.  Anything will help reduce the penalty. 

[evixdecz]

I have used Turbotax for many years but never seen it saying anything about penalty amounts.

Is the calculation done in the background (the number just got added into the total amount due without letting me worry about it)?

Where (step or page) can I see that calculation and result?

Thanks.

[Critter-3]

It is done in the background although if you owe more than $1000 the program will ask you if you want to bypass it or use the 2210AI instead.  Look for the penalty on line 24 of the 1040. 

[evixdecz]

How does Turbotax know I have paid estimated taxes or not?

I don't think it ever asked.

Or did it (asked somewhere without even letting me be aware of it)?

[Critter-3]

What are estimated taxes?

https://ttlc.intuit.com/replies/3301588

Do I need to make estimated tax payments to the IRS?

PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2015  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

https://ttlc.intuit.com/replies/3301891

 

How do I make estimated tax payments?

https://ttlc.intuit.com/replies/3301258

Can TurboTax calculate next year's federal estimated taxes?

https://ttlc.intuit.com/replies/4242911

Can TurboTax calculate the estimated payments for next year's state taxes?

https://ttlc.intuit.com/replies/3301735

[Critter-3]

Asking about estimated payments is part of the interview processes if you don't skip that section so you may have said no to making them and if your balance due was $1000 or less to the program did not prompt you further.  

Form 2210 is used to determine if you owe a penalty for underpaying your estimated taxes and figure the amount of any penalty. If you or your business made at least two-thirds of your gross income from farming or fishing, use Form 2210-F to see if you owe a penalty.

The IRS considers taxes as a pay-as-you-go situation, with taxes either withheld or estimated payments made throughout the year as you earn the money. If the amount of your tax due is a lot more than the total of your taxes withheld plus any estimated tax payments, you could be subject to a penalty for underpaying your taxes during the year.

TurboTax determines if you are subject to any penalties and includes the amount on your return for you. You can also manually use Form 2210 to calculate your penalty (but don't file this Form 2210 with your return).

Entering Form 2210 or 2210-F into TurboTax

After you enter your withheld taxes and any estimated tax payments in TurboTax, we'll determine if you need to file form 2210 and calculate if any underpayment penalties are due.

In TurboTax, jump to the estimated payments area.

1. Enter estimated tax, penalties in the TurboTax search box, then press the Enter key or click the jump to link.
2. Follow the prompts and answer the questions to fill-in the form.

[VolvoGirl · Accepted solution]

You have to manually enter any estimates you paid.  So if you don't enter any then Turbo Tax would assume you didn't pay any estimates during the year.  Then if you end up owing too much on your tax return Turbo Tax will automatically add an underpayment penalty.

And if Turbo Tax calculates a penalty on your 2019 return 1040 line 24 it is only an estimate.  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.

[evixdecz]

Thanks everyone.