Withholding penalty ignores estimated.

[cmg1]

I had withholding taxes and estimated payments during 2020. Turbotax calculates a penalty because I did not have enough withholding and totally ignores my estimated that puts me well over last years liability negating a penalty. The 2210 worksheet even states to not include $thousnads of estimated payments.

[ColeenD3]

When did you make the estimated payments? If they are not made in a timely manner, with the correct amounts, then there can still be a penalty.

[cmg1]

In December I realized i would be under withheld so I sent a one time $5000 estimated payment that put me well over my 2019 taxes paid. The Form 2210 worksheet on line 6 says "Withholding taxes. DON'T include estimated tax payments. Lines 8 & 9 show last years taxes and that I am $478 short and now owe a penalty even though my combined payments put me $4,522 over that. It appears if one had NO withholding and all estimated, they would LWAYS be under withheld.

[BillM223]

There are multiple parts to the 2210. Yes, line 6 says don't include estimated taxes paid.

However, you may be able to reduce or eliminate the underpayment penalty by using the Regular Method (Part IV) to compare your withholding plus estimated tax payment against the annualized income. 

So in the underpayment interview, ask to try to annualize your income to see if this will reduce or eliminate the penalty.

[Hal_Al]

Estimated payments* must "match" income timing.   Making only one estimated payment in December means you were late paying estimated  tax on the first 3 quarters income.   The December payment will not eliminate the penalty, but it will reduce it.  Because of the timing issue, you want to use the "annualized" method to calculate the penalty on form 2210.  TT will give you the chance to select that option. 

*Withholding (but not estimated payments) is treated as being timely, regardless of when paid.  So, it would have been possible to have had your employer withhold additional money from your pay in December and avoid the penalty.