Reporting TurboTax Bug

[randy5419]

The IRS sent me a refund because TurboTax 2024 Deluxe desktop miscalculated my estimated tax penalty.  I tried to find a way to report this other than through this forum, but could not.  When entering “Report Turbotax error in computing estimated tax penalty”, no suggestions applied.  UNBELIEVABLE. 

I’m happy to share my tax file if anyone cares.

[baldietax]

Someone will probably be along to comment generally that the TT tax penalty is only an estimate so adjustments can happen by the IRS.

But, I'm interested in the details why this happens as the calculation on Form 2210 is pretty straightforward, so I am not sure what's an 'estimate' about it unless something gets adjusted and the IRS recalculates it based on their own data on your tax/payment history - either the IRS determined a lower safe harbor amount because your 2023 tax liability was incorrect in TT, or your 2024 tax liability was adjusted, or your 2024 estimated tax payment dates were not correct in TT?  (assuming you didn't adopt Annualized Income method, that's more complicated).

if you have more context on your underpayment situation that may be helpful to share - in desktop TT you should be able to see the calculation in Forms mode by double-clicking the penalty then double-click again in the 1040 worksheet to show the Form 2210.  Does IRS send a revised 2210 back with the details how they calculated it differently to TT, or just give you $.

[baldietax]

see this similar thread, seems most likely that the IRS has slightly different information e.g. payment dates when it recalculates the penalty, rather than a bug in TT

https://ttlc.intuit.com/community/taxes/discussion/re-the-amount-you-owe-formula-on-1040-line-37/01/...

[danco17]

FWIW, I had the same issue. TurboTax's calculation was off by $135 (55%). The good news for me is that it overestimated the penalty, so I'll be getting a small refund. However, I'm concerned it will complicate matters when I file an amended return (due to receipt of a late corrected 1099).

The information I provided for my 2024 estimated tax payments was accurate. TT seems to have miscalculated one of the 4 underpayment amounts and 2 of the 4 days late. I'm not sure how that happens unless there's a bug in the software. And, if this is not a bug but just something that can happen due to the IRS using different information, shouldn't TT warn users about it before they file? I don't recall seeing any message about it. In fact, it wasn't immediately obvious to me that I had to pay a penalty at all.

[dmertz]

When doing its calculation of the number of days late an estimated tax payment might be, TurboTax uses the payment dates that you enter.  However, the IRS seems to apply an undocumented grace period for making estimated tax payments.  The result can be that the IRS calculates a lower penalty, resulting in a refund of some of the amount determined by TurboTax's more conservative calculation of the penalty.

By conservatively basing the calculation on the dates that you enter and the IRS-documented due-dates rather than calculating a lower amount using undocumented behavior of the IRS, the chance is minimized that you would receive a bill for an additional penalty that could include additional interest being owed.

Regarding amending your tax return, see page 9 of the instructions for From 1040-X regarding Refund or Amount You Owe:  https://www.irs.gov/pub/irs-pdf/i1040x.pdf