Did you enter your withholding from box 2 of your W-2s? If you did not have enough tax withheld during the year, you could still owe a penalty. And are you sure you don't have any other income, such as self-employment, reported on your tax return?
Underpayment penalties are assessed if you don't withhold or pay enough tax on income received during each quarter. In fact, it's entirely possible to get hit with an underpayment penalty even though you paid your tax bill in full by the April deadline or are getting a refund.
Tip: To reduce or possibly even eliminate your underpayment penalty, search for annualizing your tax (use this exact phrase) inside TurboTax. This will take you to the underpayment penalty section and we'll take you through the steps to possibly reduce your underpayment penalty. (If you don’t see Jump to annualizing your tax in the search results, make sure you’re in your return and not on the Tax Home page.) When you go through the penalty section, you will be able to ask for a waiver if you qualify.
If you have an underpayment, all or part of the penalty for that underpayment will be waived if the IRS determines that:
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In 2019 or 2020, you retired after reaching age 62 or became disabled, and your underpayment was due to reasonable cause (and not willful neglect); or
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The underpayment was due to a casualty, disaster, or other unusual circumstance, and it would be inequitable to impose the penalty.
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