Does a $13,500 tax liability transferred from 2023 mean that I owe the IRS this much money? Based on my AGI and the taxes I did pay there is not way I owe this much.

[mariov1294]

I had some money market accounts that earned me right about $13,500, however, I can't imagine that I actually owe as much money as the MM earned me. I've never had this question pop up so not sure how to handle it. Turbotax does say I have a penalty of $2 but I'm wondering if I am stuck paying the other $13,500 throughout this year?

[VolvoGirl]

The tax liability on  your  2023 return is the total tax on  line 24, not the tax due for 2023.  It's just used to help figure out if you have a 2024 penalty.

If you do not pay in enough tax from withholding and estimates, you may have to pay a penalty for underpayment of estimated tax. The penalty is an Estimated amount. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.

If you get a penalty on 1040 line 38, you might be able to eliminate it or at least reduce it. You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you. It's form 2210.

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

[mariov1294]

Ok, so when TurboTax is asking for the “Date of Payment” for the balance due to avoid interest, fees, etc. this is in reference to the penalty that I have to pay correct?