IRA Conversion and Estimated Taxes

[John32162]

Based on my 2022 Return, I was not required to make 2023 Estimate Tax Payments and did not make any payments until Dec 2023.   In December 2023, I converted $20,000 from my Traditional IRA to a new Roth IRA and then used the (4th) Estimated Tax Form to pay  $5,000 in taxes from my checking account (I am in the 24% tax bracket).   When I completed my 2023 taxes via Turbo Taxes, there was a "Payment Due $576.00     | Penalty/Interest $ 75.00   | Balance Due With Penalty/Interest $ 651.00".       Turbo Tax is telling me I should make four 2024 estimated payments of $2,050.00, a total of $8,200; that makes no sense.

WHY DO I HAVE TO PAY A PENALITY AND LARGE 2023 ESTIMATED PAYMENTS?        HOW CAN I AVOID THE PENALITY AND THE 2024 ESTIMATED TAX PAYMENTS     

[VolvoGirl]

You might be able to eliminate the penalty on line 38 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

Then for the 1040ES estimated payments for 2024 you can ignore them.  They don't get sent with your return and the IRS won't be expecting them.  

[John32162]

VolvoGirl   Thank you for your help.  I followed your instructions and the penalty on line 38 disappeared; my 2023 tax return has been e-filed and accepted by the IRS.    I put a copy of your instructions in my 2024 tax folder to be ready for a reoccurance of the problem.