Roth Conversion Safe Harbor Rule

[cririuss_ca]

The safe harbor rule in tax terms allows taxpayers to avoid penalties for underpayment if they meet certain payment criteria, such as:

• paying at least 90% of their current year's tax
• paying 100% (or 110% for high earners) of the previous year's tax liability

It looks like I fall under the second criteria  (I paid  100% of my 2024 withholding thru my ex-employer and got a refund at tax time).

Just wondering why TurboTax assessed a  penalty fee  for tax year 2025?  Though I already instruct TurboTax to let IRS calculate the penalty fee as instructed by a Level 15 community member. 

[AmyC]

It is possible to have a refund and an underpayment penalty but the safe harbor would prevent the penalty. Letting the IRS calculate the penalty is the best option since the program was calculating one. There may have been a dollar in rounding that created the penalty. I suggest you leave feedback where it will be read and acted upon.

Once you file your return, as long as the settings to receive communication from Intuit don’t block it, you will see a pop-up message or receive an email with a survey asking you about your experience. We encourage you to leave your notes and comments there. “Voice of the Customer” notes and comments are read and acted upon. 

If you are using TurboTax Desktop, you can also leave feedback at the Final Steps tab.