How does Turbotax handle 2023 California disaster tax relief?

[stanleyli]

Background: https://blog.turbotax.intuit.com/tax-news/irs-provides-tax-relief-for-california-storm-victims-53808...

• Quarterly Estimated Tax Payment: Tax Year 2022 4th quarter estimated tax payment with a deadline of January 17, 2023 and Tax Year 2023 estimated tax payments normally due April 18, June 15 and Sept. 15 have been extended until November 16, 2023. This means that individual taxpayers can skip making the fourth quarter estimated tax payment, normally due January 17, 2023, and instead include it with the 2022 return they file, on or before November 16.
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I elected to skip the April 18, June 15 and Sept. 15 1040ES payment in 2023 and paid the aggregate amount before November 16, 2023. However TurboTax still counted the penalty. Additionally I didn't see Form 2210 generated. 

[RobertB4444 · Accepted solution]

If you go over to the 'underpayment penalty' section under 'Other Tax Situations' you should be able to remove the underpayment penalty from your return by telling the system that you want the IRS to figure the penalty.  That will solve the problem.

@stanleyli 

[stanleyli]

Yes, there is a place that I can choose we were affected by natural disaster. Thanks.

[VinTax1]

I am using Turbotax 2023 Premier Desktop version. I dont see any option under 'Other Tax Situations' to skip estimated penalty calculations or flag natural disaster as the reason.

[stanleyli]

There is a "underpayment penalty" there. When you walk through the questions, there is a question asking you if you have been affected by natural disaster, where you can request to waive all penalties.

[MonikaK1]

If you have taxes due with your return, a penalty for underpayment of estimated taxes is calculated by TurboTax, and you paid estimated tax within the extended time period for California disasters:

Visit or revisit the Other Tax Situations section and review the Underpayment Penalty information to confirm it is correct. Go through the interview and follow the prompts; when you get to the Penalty Waivers screen, answer "yes" if you qualify for a disaster exception, then "yes" at the next screen to request a waiver of the penalty, in all or part. Enter the reason in the field provided.

If you live in a federally declared disaster area and met the special filing and payment deadlines for that disaster, you qualify for an automatic underpayment penalty waiver. Even if the penalty is calculated on the return, the IRS should not charge the penalty. 

See here for the IRS requirements for the California disasters for 2023.

If you get a notice from the IRS proposing to assess the penalty, see this IRS webpage for guidelines and next steps.

Because the Federal and state extended filing deadlines are available only for individuals living in areas impacted by official disaster declarations during specified dates, the deadlines themselves aren't updated in the software. The tax agencies made an administrative decision not to impose the penalties, but since the law itself didn't change, tax software including TurboTax still calculates the penalties. 

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment, or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

See here for related information from the California Franchise Tax Board.

@VinTax1