The IRS zeroed out the federal withholding from my annuity without telling me and now wants me to pay $197 underpayment penalty. Is this proper?

[Jer-in-exile]

I am a federal retiree. OPM confirmed IRS action and said 50% of retirees did not notice the IRS change - so why should I have to pay a penalty?

[VolvoGirl]

They stopped taking withholding out of your annuity payments so you ended up owing a tax due on your tax return?  You never noticed they weren't taking any out?  You have 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