How to Amend a prior year to recoup penalties paid

[bfrock01]

In 2024 I paid a tax penalty as I did a Roth conversion but failed to annuitize my income.  I thought this would be straight forward to file a 1040-X in Turbo Tax 2024 to recoup that penalty.  However, when I amend my return Turbo Tax accurately says I no longer owe a penalty, but then does not reflect that on Form X.  It then asks...Are you sure you want to Amend as there is no difference in tax due.  What am I missing?  

[DaveF1006]

It depends. Form 1040‑X only shows changes to your tax liability, not changes to penalties TurboTax originally calculated but now removes. Here is a specific way to prepare your amendment.

1. Fix Form 2210. In TurboTax, go back to Other Tax Situations > Underpayment Penalties. Walk through the interview for the "Annualized Income Installment Method." This will generate a new Form 2210 showing that your Roth conversion happened late in the year (Q4) and that your withholding/payments were sufficient based on that timing.
2. Check "Forms Mode" (Desktop) or "Preview" (Online). Look at your Form 1040-X. Even if the tax lines (1–11) show no change, look at the Explanation of Changes (Part III). 
3. Step 3: Manually Explain. In the "Explain why you are amending" box, you must be explicit. Use language like:

"Amending to request a refund of the underpayment penalty paid with the original return. Form 2210 has been updated using the Annualized Income Installment Method to reflect that the Roth conversion occurred in the 4th quarter, eliminating the penalty."

If TurboTax still refuses to show a refund amount on Line 21 of the 1040-X, the IRS occasionally prefers Form 843 (Claim for Refund and Request for Abatement) for penalty-only recoveries. Here is a link to download form 843 to download and mail in. This is a stand-alone form that does not need an ameneded return to be attached to it.

Most people just mail the 1040-X with the updated Form 2210 and their explanation. The IRS will review everything and notice if there’s been a penalty overpayment and refund the amount of the overpayment even if this isn't reflected on the 1040X.

[bfrock01]

Thanks for the reply.  That's exactly what I'm going to do.  I put my explanation on 1040X and included an adjusted form 2210 and 2210AI.  I also included a cover letter explaining the issue.  TurboTax never does show a refund so I am just printing the forms and using certified mail.  This is an example of where I really believe Turbo Tax needs to get better.  Two issues 1.  I did a large conversion, it should really ensure I at least attempt "un-even" income, rather than burying it in "Other Tax Situations".  Then two, not accommodating this type of amendment at all.  I learned of this mistake (which I made again this year initially) by loading into a free AI chat and had it check for potential deductions I missed.  That is how I learned I made the mistake.  

Regardless, thank you so much for your reply and help, it's very much appreciated and your answer was very thorough!