Please help - I owe IRS money and underpayment penalties, what do I do with Reject Code F8960-019-04?

[albert1120]

I know there are a lot of discussions on the Reject Code F8960-019-04 and I am monitoring them.

However, my question is will this delay affect me since I owe IRS money and I need to pay underpayment penalties for both federal and state returns (W4 issues last year)? I initially e-filed all my returns on 1/31/23 and got a reject message yesterday. My current penalties which were included in my return payment were calculated based on the date of 1/31/23. With this error, will both IRS charges me more?

[MonikaK1]

You can make a payment to the IRS before filing your return while waiting for the issue to be resolved.

To make a direct payment online with a bank account, see this link. 

When you are ready to resubmit the return, enter any additional payments made in TurboTax. Using the online version:

1. Go to Deductions and Credits
2. Go to Estimates and Other Taxes Paid
3. Select Estimated Taxes
4. Fill in the amount paid under Additional Payments

[albert1120]

If I do that, how do I claim that on my tax return?

In addition, how do I do that with my Maryland state tax?

[MonikaK1]

See my edited response above as to where to update TurboTax with the additional payment before filing.

See this link for options to pay Maryland income taxes online. You can also update TurboTax with the additional state payment before filing, the same way as the Federal. 

[albert1120]

Thank you very much for the updated note.

However, under estimated tax, here are the options I saw, would you please let me know which one to choose:

Federal estimated taxes for 2022 (Form 1040-ES)

State estimated taxes for 2022

Local estimated taxes for 2022

2021 state estimated taxes paid in 2022

2021 local estimated taxes paid in 2022

In addition, it seems that I can't fine the additional payment option for under Maryland tax return.

[MonikaK1]

For the Federal payment, under Estimated Taxes:

1. Select Federal estimated taxes for 2022 (Form 1040-ES)
2. Scroll down past the Quarterly Payments until you see the section for Additional Payments.
3. Enter the date paid and the amount paid in the boxes provided.

For the Maryland payment, under Estimated Taxes:

1. Select State estimated taxes for 2022
2. Select "yes" to the question "Did you pay state estimated taxes for 2022?"
3. Scroll down past the Quarterly Payments
4. Click where indicated to "Add another payment"
5. Enter the state, date paid, and amount paid in the boxes that appear.

[albert1120]

@MonikaK1 Thank you very much for this very clear instruction!

I have one more question for you if you don't mind. I saw from an earlier post someone said that all taxes paid after 1/17/2023 can not be considered as estimated tax for 2022. So they suggest not alter the tax return and instead choose pay by check when e-filing.

Here is my exact situation, can you let me know if I should do 4a or 4b or something else:

1. Due to a couple of reasons, I owe both federal and state taxes and underpayment penalties for 2022.

2. I e-filed on 1/31/23 but all returns got rejected with an error code Reject Code F8960-019-04. This is an ongoing problem that prevents me from e-filing now. I want to wait until this is fixed by IRS and e-file.

3. In the meantime, I want to use direct pay through my ID.me account to pay the taxes and penalties I owed on Monday 2/6/23 to avoid more penalties for both federal and my state Maryland.

4. My question is if I pay now before I e-file, which one of the following should I do? 

    a. make NO change to my current return and select pay by check when I e-file (probably by end of Feb. 2023)

    b. enter the amount I paid in estimated tax as additional payment with the date of 02/06/2023 for both federal and state like the pictures below (amounts just for demonstration).

I really really really appreciate your insight here.

[MonikaK1]

If you make additional payments before filing, then do follow the instructions to enter them as Additional Payments in TurboTax. 

Yes, it's correct that they won't be counted as timely Estimated Payments for 2022, because that deadline has passed, but making the payments now is an option you have to get the payments on record with the IRS and State while you are waiting for the IRS problem to be resolved so that you can e-file.