Indiana Underpayment Penalty

Forum|Forum|2 years ago
February 19, 2024
4 replies
57 views

Form IT-2210A assumes that withholding is equally distributed in the 4 quarters. It does not appear to allow you to adjust withholding based on what is actually withheld in the quarter. This results in a penalty. Is this a known problem with turbotax that is scheduled to be fixed? When will it be fixed?

JC Indiana66Author

Level 2

Indiana Department of Revenue guidance supports non-uniform withholding for the purpose of figuring a penalty.

Income Tax Information Bulletin # 3

Dated: December 2023.
Starting on page 3:

‘If withholding as an employee or race team member does not occur evenly over the course of the year, enter the actual withholding during the period during which payments are required. Withholding payments will be treated as occurring on the date of actual withholding (i.e., the date on which you are paid) for purposes of determining any penalty due. You may be asked to provide substantiation of the withholding such as pay statements.’

TurboTax Indiana does not to appear support. The federal underpayment penalty does support non-uniform withholding.

Is this a planned update? When can I expect the update?

CatinaT1

Level 15

This form, IT-2210A, is an Unsupported Form for TurboTax. You can include this form if you paper file. You may need to make adjustments to the form prior to mailing your return so the calculation is accurate.

I suggest you mail it with a note that the software doesn't support the adjustments for the form. The taxing authority will do the adjustments for the penalty on your behalf.

Indiana Dept of Rev

[Edited 3.1.24 | 10:20 am]

@JC Indiana66

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RDC6

Level 2

The screen shot showing that Indiana Schedule IT-2210A is "Ready for print" is misleading. TurboTax does NOT actually even complete the IT-2210A, even if a user elects to print and mail their tax return. When a user has unevenly earned income TurboTax defaults to the IT-2210, which is only to be used for evenly earned income, which it then includes with the documents it prints. And then, in some cases, TurboTax will incorrectly compute and add a penalty to the tax return.

The only way to avoid the penalty is to print Schedule IT-2210A from the Indiana DOR website, and manually complete and include the document with your printed and mailed tax return. You'll also need to print and complete a new copy of Form IT-40, since the tax penalty will be included, in error, on that form as well.

I reported this to Intuit a full month ago, and tried to explain this problem and its consequences to the TurboTax user, in a two-hour phone call with a support representative. I know that other TurboTax users have also reported the same problem. Unfortunately, the company doesn't seem to think it's a priority to fix, even though we're most of the way through tax filing season. It's a pretty disappointing response given that TurboTax is marketed as a premium product with a "maximum refund guarantee" and "100% accurate calculations guarantee"!