Form 2210 did not generate but TurboTax software calculated an underpayment penalty

[Daniel_K]

That answers my questions - thanks @MikeF2 and @metrangia!

[raghu2600]

IRS has sent me a refund check stating "We reviewed your Form 1040 for the tax year ending 2023 and found that you miscalculated your estimated tax penalty".  I received a 1099 for a gig job that I performed in October 2023, and TurboTax miscalculated penalty for this payment.  There was no Form 2210 in the printed forms, so I thought Turbo Tax calculated the penalty behind the scenes. After reading here, I realized that you have to click Open Form in desktop edition and manually search 2210. Not sure why TurboTax would do this way. First of all, TurboTax miscalculated the estimated tax penalty and second they hid 2210 from printed forms. 

[MikeF2]

When you filed your return with TurboTax did you specifically give the date you received the income from the gib job? Because you would've owed estimated tax for the one quarter (4th quarter). Otherwise, i think TurboTax will say you received it across all four quarters by default. And check the messages on this thread. On Form 2210, it says not to send in the form unless you wish to request a waiver. But i am sorta surprised the IRS responded as fast as they did with a refund no less. 

[raghu2600]

I entered it as a 1099-NEC income. I don't think TurboTax has asked me a date or dates of when this gig job was performed. My understanding of Estimated Payments is that based on current year's income, you should estimate next year's estimated tax. This particular 1099 job was a one time job that I performed and was not estimated in 2022.  You are right, TurboTax has calculated across all 4 quarters and that's why IRS corrected it and sent me a refund of penalty. 

[MikeF2]

"My understanding of Estimated Payments is that based on current year's income, you should estimate next year's estimated tax. "

Yes, sorta i guess. I think that applies to people who use the "safe-harbor rule" which i do. Personally, i estimate my tax liability for the whole year (2024 in this case) as same as my tax liability for the previous year (2023) and divide it by two and send the IRS the payments in Quarters 1 and 2 of 2024. So i front-load the payments, to be safe, because it matters when you pay your estimated tax. But the safe-harbor rule doesn't work for everyone. It sounds like you just had a job pop up in October 2023 and got paid then.  The IRS knew about it because they saw your 1099 but the Turbotax program needs to be told when you earned the extra income otherwise it'll default to all four quarters. You would've been OK if you made an estimated tax payment (1040-ES) for the 4th quarter (i think it would've been due Jan 15, 2024) because you had earned it in the 4th quarter. If you had earned it in the 1st quarter of 2023, the Turbotax program would've been right to penalize for all 4 quarters. 

[MikeF2]

Let me add to search on "safe harbor rule as it applies to estimated taxes" on the internet. They can explain it better than i can. 

[raghu2600]

Thanks @MikeF2 

[DawnC]

Did you mark the mark to Let the IRS bill me?   When you select that option, the IRS sends you a bill.   If you pay the penalty within the date on the notice, no interest is charged.   See Form 2210 instructions.    @raghu2600 

[reblev155]

The 2210 form is not shown when I go thru that menu (online version).  It only says I need to pay $x for underpayment.  This is the first time I have heard of this!  I wasn't notified by the IRS.  No form is shown is shown in TT, just the message.  I looked on my 1040 for 2023 and it says I had an estimated tax penalty (?) of a much smaller figure, after I paid a sizable amount of taxes, shown in line 37.    This is all news to me. 

[reblev155]

That option is not open to those of us using the online version of TT. 

[DoninGA]

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@reblev155 wrote:

That option is not open to those of us using the online version of TT. 

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Using the Online editions - on the left side of the online program screen -

Click on Federal 

Click on Other Tax Situations 

Click on See all uncommon tax situations (if shown)

Under Additional Tax Payments

On Underpayment Penalties. click on the start button

[reblev155]

I still don't know how to handle this situation and how I should respond to the menu prompts for Underpayment Penalty.  

[reblev155]

Still did not see the 2210 and my IRS account did not have it either

[IsabellaG]

If you haven't filed your tax return yet, the IRS wouldn't have any record that you underpaid your estimated taxes. Are you asking about the 2023 return that has already been filed, or the 2024 return that you are preparing. DoninGA has given you the directions to go through the Underpayment of Estimated Tax section, but if you have specific questions about the screens you are seeing, please provide more details.

[reblev155]

Thank you for the links and the instructions!  Much more helpful than the online "expert" I talked to at TT.  I searched the IRS site for the 2210 and didn't find it among the forms, but thankfully the link you provide sent me to the form, which is there.   After I filed my return (amid much confusion and frustration) I downloaded the form, printed it and filled it out, following the instructions and it appears I don't have to file a 2210 for 2024.  The online version of TT told me I didn't have to pay underpayment penalty for 2024, after i entered the amount from line 38 from my 2023 return.  I used this amount instead of the amount from the 2210, which I didn't have access to at the time i filed my return.  I am not sure if this was the correct thing to do or not.   This is the first time I have encountered the underpayment penalty and the 2210 issue, so I was clueless as to what to do.