Estimated Tax Penalty - appears incorrect + Where did my overpayment go

[oldmankingsfan]

2 issues: 2023 Form 1040 Line 38: Line 34 shows over payment of $542, Line 36 amount of refund to apply to 2024  is $38 (which is what I thought my over payment/refund was at that part of the TTax input), and Line 38 shows an estimated tax penalty of $504.

(1) Where did my $542 overpayment go?

(2) Why is TTax showing showing an estimated tax penalty on line 38 (coincidentally the amount of line 34 minus line 36).

Do I need to start a completely new Fed return to clear this up?

Thank you.

[MarilynG1]

No, you shouldn't have to start a new Federal return.  If you're in TurboTax Desktop, on Form 1040, enter the amount Overpaid in Line 34 to Line 35a (amount of Line 34 you want refunded to you).  Delete the amount in Line 36 (amount applied to 2024). This should correct your issue.

If you're in TurboTax Online, from the Tax Tools >Tools menu on the left, choose 'Delete a Form'.  From the list of Forms, choose 'Estimated Taxes and W-4 Worksheet' to delete.  Return to the Estimated Taxes interview in TurboTax, under Deductions & Credits, and proceed through the questions again. 

Here's more info on Estimated Taxes.

@oldmankingsfan 

[fanfare]

where did it go?

504 went to penalty

38   went to next year's taxes.

@oldmankingsfan 

[dmertz]

If you made estimated tax payments, is seems that you did not make large enough estimated tax payments early in the year to avoid underpayment early in the year even though you made payments later in the year to result in a refund.  If you incurred a larger amount of your income later in the year you might have to annualize income on Schedule AI of Form 2210 to lower the penalty.  For example, if all of your income occurred in Q4, you had no tax withholding and the only estimated payment you made was the Q4 payment, you would have to annualize income on Schedule AI to avoid penalties for Q1 through Q3.

[oldmankingsfan]

Thank you. I think I found at least part of the problem. If you lived in certain counties in California, both the IRS and the FTB allowed the following for paying taxes (including estimates) in 2023: the due dates for 1st, 2nd and 3rd quarters were delayed to October 15, 2023. I entered the actual date I paid (October 4th) and the total paid. In digging into fed return, I found TTax completed form 2210 - Underpayment Penalty. It calculated penalty based on not making 1st-3rd Q payments until October. This appears to be a serious glitch for California filers. Not sure how to proceed. I sure don't want to have the IRS mess with my numbers.

[dmertz]

TurboTax only estimates the penalty.  You can always choose to have TurboTax not add any penalty and let the IRS bill for any penalty the IRS determines, but since the Q1, Q2 and Q3 payment dates were all delayed until October 15, 2023, I would just indicate to TurboTax that the entire amount paid by October 15 was paid on April 15, 2023.  If doing so eliminates the need for Form 2210, nothing about your payment-date entries will be apparent to the IRS.