Turbotax handling of deferred estimated tax payments for 2023

[RobFixit]

In 2023, we were allowed to delay our estimated tax payments until October for our Federal and State taxes in most of California, yet if I put the quaterly payments all paid in October, Turbotax calculates a penalty for underpayment. Should I just enter the payments as being paid quarterly instead of the 3 quarters all paid legally in October because the government gave us that option last year so that it does not calculate and include penalty charges?

[MonikaK1]

You should enter the correct payment dates. If an underpayment penalty is calculated, but you met the extended dates for disaster relief, then the IRS and Franchise Tax Board have agreed not to assess the penalty.

Because the Federal and state extended filing deadlines are available only for individuals living in areas impacted by official disaster declarations during specified dates, the deadlines themselves aren't updated in the software. The tax agencies made an administrative decision not to impose the penalties, but since the law itself didn't change, tax software including TurboTax still calculates the penalties.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment, or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

See here for the IRS requirements for the California disasters for 2023.

If you get a notice from the IRS proposing to assess the penalty, see this IRS webpage for guidelines and next steps.

See this IRS webpage for more information.

In California, see this webpage for more information from the California Franchise Tax Board. 

[marty231]

I don’t understand this answer. When I put in the actual date I made the  payments using the extended November 16 date, then TurboTax includes tax penalty in my return, so I need to pay it.

[DawnC]

In the Underpayment penalty section, there is an option to waive the penalty.   You will mark that box, provide the explanation and the penalty amount will not be included.   

If you have an underpayment, all or part of the penalty for that underpayment will be waived if the IRS determines that:

• In 2022 or 2023, you retired after reaching age 62 or became disabled, and your underpayment was due to reasonable cause (and not willful neglect); or
• The underpayment was due to a casualty, disaster, or other unusual circumstance, and it would be inequitable to impose the penalty. For federally declared disaster areas, see Federally declared disaster, later.    @marty231 

[marty231]

Thanks so much for the answer. In my case since I am in a federally declared disaster area, the link you sent to the instructions to form 2210  says 

“ Don't file Form 2210 if your underpayment was due to a federally declared disaster. If you still owe a penalty after the automatic waiver is applied, the IRS will send you a bill.”

So in order not to generate a 2210, I will tell turbotax that I made the quarterly payments by their regular due dates. Does this seem OK? 

[ThomasM125]

Yes, you will enter the payments as if made by the original due dates. The taxing authority should not assess penalties based on the address on your tax return. If you do get a penalty, there will be instructions on the notice you receive as to how you can protest them. @marty231