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New Member
posted Mar 27, 2025 7:42:22 AM

I get a screen stating I have a 2023 tax liability. Estimated payments for 2023 were made on time and the balance was paid for 2023. does this mean?

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1 Replies
Expert Alumni
Mar 27, 2025 8:03:44 AM

Your underpayment penalty is on your 2024 return, not your 2023 return. However, you use your 2023 liability to help determine whether you have a penalty for 2024.

 

The Tax Code requires us to pay our tax throughout the year, and if we don't make our minimum annual payment through withholding and/or estimated tax payments then we may incur a penalty. 

 

The penalty can be avoided if we pay at least the smaller of:

- 90% of the current year tax liability or

- 100% of the prior year tax liability (or 110% if our income was $150,000 or more)

 

TurboTax asks about your 2023 liability to try to reduce or eliminate your penalty on this year's return.