@rod4
That can happen if you made a large estimated tax payment in (usually) the last estimated payment of the year....even if you overpaid by a million $$.
For $3 I wouldn't worry about it, but an explanation follows.
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Say, you receive Huge Mutual fund distributions in December (this year they were big), and you made a final
4th Qtr Estimated payment to cover its taxes.
Thing is, the forms you entered for everything...they did not specify when the $$ were received. A such, the background default calculation assumes all your income, W-2, 1099-R, 1099-DIV, 1099-INT etc etc, was received evenly over the entire year. Thus it may think you underpaid for the first 3 quarters....at least with the initial background default calc.
the solution to this to get the penalty reduced, or eliminated is to go to the "Other Tax Situations" page in the Federal section, and find the "Underpayment Penalty" area and go thru the interview/calculations there to prepare the form 2201/2210AI "Annualized Income" calculations. Those clacs let you define exactly which qtrs, ALL your various sources of income occurred during the year. Problem is, that takes a LOT of work with all your account statements for the entire year. Having done it once , I won't bother doing it again for a penalty less than ~$50, and if over that, I might have to think about it.
Of course, if your extra high income occurred in the first or second qtr, working thru those forms might not help any....especially if you paid the estimated tax late in the year.
$3??? Pffft! Move on with your life.
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....unless you are intrigued, and if using the "Desktop", make a second backup copy of your tax file, and play with that backup copy to see what is required...so you don't mess up your original.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
