Payment of estimated taxes in the state of Indiana assessing under payment penalty

[MarcIke]

I pay my Indiana state taxes quarterly.  I enter them in the estimated taxes section in Turbo Tax.  Payments were paid on time 4/15/2025, 6/15/2025, 9/15/2025 and 1/15/2026.  Turbo tax is charging an underpayment penalty of $13 with the message that payments are less that 90% of total.  This is odd since I am actually getting a refund.  If I change the date of the 4th quarter payment to anytime in 2025 the penalty goes away.  The 4th quarter is not due until 1/15/2026 which I paid before that date but in 2026. Its as if it is not counting that payment against the 2025 taxes.  Is this a bug?

[LaShaunA3 · Accepted solution]

Indiana calculates the underpayment penalty on a quarterly basis. Even if all four estimated payments were made on time, each installment must be large enough to meet the required amount. This is 25% of 90% of the current-year tax. Or 100% of the prior-year tax). 

If earlier quarterly payments were insufficient, a small penalty may apply for those quarters, even if you ultimately overpaid.

When you change the 4th payment date to 2025, TurboTax reallocates that payment to earlier quarters, which removes the penalty but wouldn't reflect the actual payment timing.

If your 2025 income was uneven during the year, you may be able to reduce or eliminate the penalty by using Indiana’s annualized income method (Schedule IT-2210A).

Payment of Indiana Estimated Tax by Individuals.