Does Turbotax submit the form 2210 for underpayment of estimated tax or do I need to submit that myself?

[tk01kj]

I owe a tax penalty of $250 due to underpayment of estimated tax in 2019. Does Turbotax automatically submit the Form 2210 on my behalf to pay the penalty or do I need to calculate the penalty myself?

[DoninGA]

The software would have calculated the the underpayment penalty and it would be entered on your federal tax return Form 1040 Line 24.  It is included in the amount of federal taxes owed or has reduced your tax refund.  The Form 2210 is included with your tax return when it is filed.

[tk01kj]

My 2019 AGI is $109k, but I only withheld $7k in federal taxes, so I now owe $11k in federal taxes. Since this is the first time that I owe a tax penalty and that I received a tax refund for federal taxes withheld in 2018, am I able to waive this $250 penalty? Turbotax lets me waive the penalty on the web portal, but I am not sure if it is safe to do so for IRS.

[DoninGA]

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@tk01kj wrote:

My 2019 AGI is $109k, but I only withheld $7k in federal taxes, so I now owe $11k in federal taxes. Since this is the first time that I owe a tax penalty and that I received a tax refund for federal taxes withheld in 2018, am I able to waive this $250 penalty? Turbotax lets me waive the penalty on the web portal, but I am not sure if it is safe to do so for IRS.

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IRS Tax Topic for underpayment penalty and waivers - https://www.irs.gov/taxtopics/tc306

The law allows the IRS to waive the penalty if:

1. You didn't make a required payment because of a casualty event, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or
2. You retired (after reaching age 62) or became disabled during the tax year or in the preceding tax year for which you should have made estimated payments, and the underpayment was due to reasonable cause and not willful neglect.

Refer to the Instructions for Form 2210 (PDF) for information on requesting a waiver of the estimated tax penalty.

Refer to Publication 505 for information about federally declared disaster areas.

[tk01kj]

Most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of 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.

If I withheld $7k in federal taxes in 2019, do I still owe the underpayment penalty if I withheld $7k in 2018 and had a tax return in 2018 of $3k? I didn't file 2018 tax return with Turbotax so I am not sure if Turbotax has checked my 2018 tax return.

[DoninGA]

@tk01kj You can go back through the underpayment penalty section of the program to make sure any penalty being calculated is accurate based on your tax situation.

To access your current year online tax returns sign onto the TurboTax website with the userID you used to create the account - https://myturbotax.intuit.com/

Click on Take me to my return

Or -

When you sign onto your online account and land on the Tax Home web page, scroll down and click on Add a state. 

This will take you back to the 2019 online tax return.

See this TurboTax support FAQ for Form 2210 - https://ttlc.intuit.com/community/tax-payments/help/how-do-i-add-form-2210/01/25703

[tk01kj]

When I started my new job in beg of 2020, I mistakenly changed my withholding status to Exempt based on stupid advice that I received from a non-competent tax advisor, so I under-withheld federal taxes for the first quarter of 2020. I also made some investment income that I need to pay short-term capital gains on. Although I requested additional deductions for the remainder of the year to make up for it, because I did not have enough tax withheld in the first quarter of 2020, I will likely still need to pay an underpayment penalty despite a tax refund. Is there anything I can do now to avoid the penalty, such as to make a federal tax payment to the IRS by the 2020 Q2 estimated tax deadline July 15?

I checked the 2019 F2210 https://www.irs.gov/pub/irs-pdf/f2210.pdf and could not find anything that factors in 2018 estimated taxes paid on the 2019 under-withholding penalty. Is there an expert I can consult if I can waive the underpayment penalty since this is the first time in my career that I owe the penalty?

[DoninGA]

@tk01kj That is why I suggested you go through the underpayment penalty section of the program it see if using either the Regular Method or the Annualized Method would enter reduce or eliminate penalty.

The TurboTax software will ask for your 2018 tax information in the underpayment section.

Based on what you have posted it does not appear that you would be eligible for a waiver.  So your best option is to go complete the Form 2210 in the program.

If you are using the desktop CD/Download editions -

• Click on Federal Taxes
• Click on Other Tax Situations 
• Under Additional Tax Payments
• On Underpayment penalties, click on the start or update button

TurboTax support is open from 5am to 5pm Pacific time, Monday thru Friday

Use this website to contact TurboTax support during business hours - https://support.turbotax.intuit.com/contact/

[tk01kj]

@DoninGA 

Thanks. What about my first question above? I am a W2 salaried employee, how can I pay estimated taxes before the Q2 deadline, or increase my withholding for 2020, to not owe underpayment penalty again? I made $15k in stock gains (short term) in March 2020 and I might need to pay some of the estimated taxes now instead of at tax filing time?

[DoninGA]

You can use the IRS Form 1040-ES and the worksheets to calculate the amount of estimated taxes for 2020.  The Form 1040-ES and your payment can be mailed to the IRS.  2020 Q2 is due on or before July 15, 2020

IRS Form 1040-ES - https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Or you can pay 2020 estimated taxes on the IRS payment website using Direct Pay - https://www.irs.gov/payments

[tk01kj]

@DoninGA I calculated that I will need to pay $50k total in federal taxes in 2020. If my employer did not withhold enough federal taxes in Q1 2020, and I make Q2 and Q1 estimated tax payments directly to the IRS by July 15, totaling my total federal tax paid to $25k, will I still owe the underpayment penalty for Q1? Will my W2 from the employer reflect the federal taxes paid directly to IRS? Where do I need to put the taxes paid on 2020 tax return?

[DoninGA]

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@tk01kj wrote:

I calculated that I will need to pay $50k in federal taxes in 2020. If my employer did not withhold enough federal taxes in Q1 2020, and I make Q2 and Q1 estimated tax payments directly to the IRS by July 15, will my W2 from the employer reflect the federal taxes paid directly to IRS? 

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The W-2 that you receive from your employer will only reflect the federal taxes withheld by the employer.  Not any estimated taxes you paid directly to the IRS.  Those estimated tax payments you will have to add to your 2020 tax return that you file next year.

[tk01kj]

@DoninGA 

Will I get into trouble with the IRS due to mistakenly put myself as Exempt on my W4 then correcting it and paying estimated taxes directly to IRS by Jul 15? I honestly did not know and did so based on bad advice I got from someone.

For 2020, I’m hoping to avoid the penalty or minimize by paying 50% of my total federal tax by July 15 (even though it’s not through employer withholding) would this ensure I don’t have underpayment penalty

[Idk Wid]

I know this is old but just my two cents.  My understanding of the rules on the underpayment penalty is that you weren't able to avoid the penalty entirely.  You would have been charged a penalty on the underpayment for Q1 even if you paid it on July 15, but doing so would have minimized it.  I believe you would have avoided the penalty had you increased your withholding to equal within $1000 of your tax liability(or the lower of 90% of this year's liability or 100% of last year's).  This is because I believe withholding is considered paid evenly each quarter.

This is my interpretation of how it works.