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Each state has its own criteria for charging an underpayment penalty. When you go through the Illinois state interview, if TurboTax has calculated a tentative underpayment penalty for Illinois, then this interview screen will appear:
Answer "No" to this question in order to access the rest of the questionnaire.
Depending on how you answer the questions, the penalty may be reduced or eliminated.
If you answer "Yes", then Illinois will calculate the penalty and send you a bill. You will have the opportunity to appeal the determination.
See this Illinois webpage for more information about the state's underpayment penalty.
Illinois encourage taxpayers to let them calculate the penalty. See Illinois Publication 103 for more information.
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