Underpayment Tax Penalty

[DB991]

@deci37 

Did you check the 2022 tax amount paid in "Other Tax Situations"/"Underpayment penalties"?   TT had mine as zero, but when I updated it to the actual amount I had paid, the penalty went away.

[deci37]

Thanks DB991. Maybe second, third time is the charm?? Tried that again, and it seemed to work this time. Fingers crossed it sticks.

The first time I did that, it did not take and me to put in when I expected to pay the 2022 balance due. When entering April 18, 2023, it gave me an error saying I couldnt have a date later today's current date... head scratcher as I am pretty sure its 2024. Also tried 2022 as a payment date, got the same error so there is bug (or a few) in the date validation code and this code block.

[DB991]

@deci37   Glad to hear it worked!   

Did you use TT last year?  This is my first year using TT; I've always used H&R Block's software and have been pleased.  But I got TT Premium for next to nothing from my broker, so I thought I'd try it.   I wonder if TT just isn't smart enough to import all the necessary info from other tax software, even though it did import the basics including our AGI.  

In any case, leaving 2022 taxes paid as a blank is bug.  Especially when the interview process NEVER asked for this data!  Overall TT seems fine, but I've never encountered such a flagrant oversight in H&R's software.

[deci37]

I have used TT for a number of years. I did move over to H&R Block for a few years but had some issues one year with their software so came back to TT. 

[driddledog]

In reference to your comment about line 6 on Form 2210, the estimated taxes are actually included in line 11 and compared to the lesser of 90% of current year income OR 100% of last year's tax return (110% if over $75k for single filer, $150k for joint). So it reads as exactly as we all expect. Not a tax professional, but I went through the form just to verify for myself!

[fuadada]

2024 form 1040 instruction has shown leave estimate tax line #38 Blank, IRS will calculate and inform you later . Why Turbotax Deluxe 2024 software add penalty on line 38 for the Deluxe software?  It does not shown form 2210 in the software....do you need to update the software?

[ThomasM125]

You can leave the estimated tax penalty as reported on Form 1040 line 38 blank and the IRS will calculate the penalty for late payment of tax for you. However, you can also enter the penalty to avoid having to deal with it later. Since the entry is optional TurboTax has chosen to estimate the penalty and enter the amount due. 

@fuadada

[proteus1966]

I owe an underpayment penalty for 2024 and want to let the IRS determine the penalty amount. My question is do they use the filing date of my taxes to determine how much the penalty is or do they calculate it using 4/15/25 tax filing deadline date? There is no clear explanation of this that I can find anywhere. Thanks

[DB991]

The methodology depends on whether or not you had taxes paid/withheld per a W2.   What I've read before is if you had W2 tax withholding the IRS just uses the April 15 tax deadline to calculate under payment penalty.  If you pay estimated taxes they could use each of the quarterly estimated tax due dates.   I can't link a source for this info; it's just what I recall.  Hopefully someone else can give an actual info source.

[MarilynG1]

Here's a link from the IRS, which indicates either the tax filing due date, or the quarterly due date for estimated payments. 

How we calculate the penalty

We calculate the amount of the Underpayment of Estimated Tax by Individuals Penalty based on the tax shown on your original return or on a more recent return that you filed on or before the due date. The tax shown on the return is your total tax minus your total refundable credits.

We calculate the penalty based on:

• The amount of the underpayment
• The period when the underpayment was due and underpaid
• The published quarterly interest rates for underpayments

@proteus1966 

[proteus1966]

Ok, thanks for the reply. Also I am planning on filing my return electronically via TurboTax and then paying my tax due using the IRS Direct Pay website.  When I file my return electronically with TurboTax I don't get the option to send payment via Direct Pay...the choices are direct debit or mail in a check.  Should I select the 'mail in a check' option?

I want to receive a confirmation number for my payment as soon as I make it. My understanding is I won't get a confirmation number if I pay using the TurboTax direct debit method so I would like to use the Direct Pay method directly with the IRS.  Does it make a difference if I choose the 'mail in a check' option and then use Direct Pay to pay my tax bill? Thank you.

[VolvoGirl]

Yes you can select mail a check and then go Online to pay it.  Pay the IRS directly at

Https://www.irs.gov/payments