I pay no wh or est tax thru the calendar year, but pay all tax due by 4/15. 2018 I overpaid and received a refund, but was penalized for not paying estimated tax. Why?

[VolvoGirl · Accepted solution]

I had a refund once and still had a penalty for not paying in evenly during the year.

Getting a Refund and have a penalty?
https://ttlc.intuit.com/questions/2584221-why-am-i-getting-an-underpayment-penalty-if-i-m-getting-a-...  

[Critter]

LOL ... our tax system is a pay as you go affair so you cannot get away scott free by just making a big payment at the end of the year.  Our government needs money to run ... can you imagine if everyone did what you did ?  Our government would collapse ... so to keep you from doing this underpayment penalties are in place.  So it is very possible to have a refund on your return but still owe underpayment penalties. 

[diamondrichlb]

LOL indeed. I’ve done this for over 40 years with no penalty. I appreciate you folks who pay as you go. Keep it up.

[diamondrichlb]

If I should have incurred a penalty wouldn’t TT software calculate that and tell me what was due?

[Critter]

There is the annualized method to calculating the penalty if your income is earned unevenly during the year ... and the program will complete it either way (usually automatically)  depending on your answers to the interview questions and the income entered.

[diamondrichlb]

I'll look again, but I can't find any calculation for a penalty on my filing. If I was supposed to pay one, I would prefer to do it at the proper time, not have the IRS tell me. Do you know what form a penalty would be on?

[Carl]

Generally, if what you owe the IRS at tax filing time is more than $1000 or more than 10% of your total tax liability (whichever is higher), an underpayment penalty is assessed. So it's perfectly possible you were within range to not incur a penalty in the past. It's also possible you did incur a penalty in the past, and this is just the first year you caught it. On past year's tax returns any underpayment penalty would be shown on line 79 of the 2017 form 1040 and earlier years.

[VolvoGirl]

It's form 2210.  You might be able to double check it.

You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

It's under
Federal or Personal (for Home & Business Desktop)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button

If you have the desktop program you can switch to Forms Mode (click forms in the upper right (left for Mac)) and open the 2210 form.