Hi all,
turbotax says that I need to pay a penalty, based on the 1099-MISC and 1099-NEC forms I got on a research stipend for 2020.
The IRS wants to collect tax from you at approximately the same time you receive your income. If they don't get it then, they charge you a penalty for having to wait for it.
If you are a regular employee, your employer withholds tax from every paycheck and send it to the IRS.
Taxes are rarely withheld from 1099-MISC and 1099-NEC income. The IRS expects you, the recipient of that income, to make estimated tax payments throughout the year so you don't owe tax at the end of the year - and they don't have to wait all year for their money.
If you didn't make estimated payments during the time you received the income and end up owing tax in it, then you will be charged an underpayment penalty.
can turbotax help me declare estimated payments during the year (for next time?)
Unless you know how much you will make, it is difficult to predict how much to pay.
These are quarterly tax payments made to the IRS for income you received that wasn’t subject to federal tax withholding.
If you receive significant non-wage income, such as from self-employment or investments, you will likely need to pay quarterly estimated taxes or run the risk of underpayment penalties in addition to a large year-end tax bill.
If you’re at risk for an underpayment penalty next year, we'll automatically calculate your estimated tax payments and prepare 1040-ES vouchers that include the payment due date.