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gmtax2020
Returning Member

penalty and interest in 2020

Hi 

I trying to file a tax in Jun 2020. Deadline for filing tax is July 15 2020.

By I see $78 as penalty. please provide suggestion to avoid.

 

Thanks

 

2 Replies
DawnC
Expert Alumni

penalty and interest in 2020

Underpayment penalties are assessed if you don't withhold or pay enough tax on income received during each quarter.   In fact, it's entirely possible to get hit with an underpayment penalty even though you paid your tax bill in full by the April deadline or are getting a refund.

 

Example: Joe is self-employed and estimated next year's tax bill at $20,000. Rather than making 4 quarterly payments of $5,000 apiece, he chose to pay $500 in each of the first 3 quarters, and the remaining $18,500 in the fourth quarter.

When he filed, his actual tax bill came to $17,270 and he got a $2,730 refund. However, he got hit with the underpayment penalty because he underpaid his estimated tax in the first 3 quarters.

 

Tip: To reduce or possibly even eliminate your underpayment penalty,  search for annualizing your tax (use this exact phrase) inside TurboTax. This will take you to the underpayment penalty section and we'll take you through the steps to possibly reduce your underpayment penalty. (If you don’t see Jump to annualizing your tax in the search results, make sure you’re in your return and not on the Tax Home page.)

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fanfare
Level 15

penalty and interest in 2020

too late to avoid penalty this time.

Make appropriate adjustments for next year.

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