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jarousk07
New Member

My return wants me to file an underpayment penalty but with my W-2 withdrawals and my estimated paymentsI am getting a refund. How can that be?

 
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SteamTrain
Level 15

My return wants me to file an underpayment penalty but with my W-2 withdrawals and my estimated paymentsI am getting a refund. How can that be?

hard to know for sure...BUT

IF you didn't make 4-equal quarterly payments, then a penalty might be calculated even with a refund.  To possibly avoid it, you would have to prepare the forms 2210/2210AI   (which are not available yet...probably 14 Feb), and work thru the messy Annualized Income calculations.  But if the penalty is less than ~$50...I'd just pay it.

________________

example.  IF you had an unusual 4th Qter income gain and made a single 4th Qtr estimate hat overpaid by $10,000....you could still  have a penalty...until you do the Annualized income calculations.  (A LOT of work)

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

View solution in original post

1 Reply
SteamTrain
Level 15

My return wants me to file an underpayment penalty but with my W-2 withdrawals and my estimated paymentsI am getting a refund. How can that be?

hard to know for sure...BUT

IF you didn't make 4-equal quarterly payments, then a penalty might be calculated even with a refund.  To possibly avoid it, you would have to prepare the forms 2210/2210AI   (which are not available yet...probably 14 Feb), and work thru the messy Annualized Income calculations.  But if the penalty is less than ~$50...I'd just pay it.

________________

example.  IF you had an unusual 4th Qter income gain and made a single 4th Qtr estimate hat overpaid by $10,000....you could still  have a penalty...until you do the Annualized income calculations.  (A LOT of work)

*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

View solution in original post

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