Tax Year 2021 Calculation of Underpayment Penalty

[Raendrea]

Turbo Tax shouldn't be generating a Form 2210 Underpayment of Estimated Tax... until it evaluates if there is an entry in "Line 37 Amount you owe." of the 1040.  In the 2021 Instructions for Form 2210 under "Who Must Pay the Underpayment Penalty" it says "In general, you may owe the penalty for 2021 if the total of your withholding and timely estimated tax payments didn't equal at least the smaller of:  1.  90% of your 2021 tax ..."  In the 2021 Form 1040 instructions on page 62 under "Line 38 Estimated Tax Penalty" it says " You may owe this penalty if Line 37 is at least $1,000 and it is more than 10% of the tax shown on your return, or You didn't pay enough estimated tax by any of the due dates.  This is true even if you are due a refund."  I have overpaid and am receiving a refund, but because I pay over fifty percent of income tax with estimated tax payments, Turbo Tax is generating a Form 2210.  How can I fix this error?

[ErnieS0]

There is no error. The Form 2210 calculation does not include estimated payments. Line 6 of Form 2210 says: "Withholding taxes. Don’t include estimated tax payments."

The IRS is a pay as you earn system so if your withholding doesn't meet the test of 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller, then you will have to spread your withholding more evenly with your income to avoid the tax penalty.