Turbotax deluxe estimated a tax penalty on my return of $347, but I don't see where it ever asked for dates of income. How does it calculate this penalty? Most of my income came from long term capital gains in November and an IRA rollover to a ROTH IRA in December. My other income came from monthly interest and dividends in which no tax was taken, and from monthly pension and job income which had taxes taken out. I carried over a 2023 refund to 2024 taxes and paid estimated taxes that I believe covered taxes owed. I believe that TT calculated all my income equally over the whole year, instead of just in the 4th quarter when the cap gains and rollever were realized. I can find no forms in TT that show how it was calculated. How do I find out how it was calculated? I manually filled in form 2210 and it appears to show no penalty .
If you get a penalty on 1040 line 38, you might be able to eliminate it or at least reduce it. You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you. It's form 2210.
How to add form 2210 for Underpayment Penalty
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-add-form-2210/00/25703
It's under
Federal or Personal (for Home & Business Desktop)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button
If you get a penalty on 1040 line 38, you might be able to eliminate it or at least reduce it. You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you. It's form 2210.
How to add form 2210 for Underpayment Penalty
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-add-form-2210/00/25703
It's under
Federal or Personal (for Home & Business Desktop)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button
Thank You so much! This is exactly the info I needed. I found the forms exactly where you indicated they would be. I just went through this on TT and it eliminated all penalties. Since I paid my quarterly tax at the same time as my conversion and my capital gains, this is what I expected.
I also looked up the similar area on my state return and eliminated the penalty there also.
I just saved ~ $430.
I appreciate the help and the fast response!
My withholding for 2024 exceeds my tax due in 2023 by almost 900 why is program adding 26.00 penalty
Did you go through to the end and answer the questions about removing the penalty? If not, then you can do this under Other Tax Situations>>Underpayment Penalty.
If so, did you earn over $150,000 for the year? If so, you need to pay at least 110% of last years tax liability.
Also, remember, the 100% and 110% are of last years tax liability not tax withholdings. So if you had to pay in last year, 100% of your withholdings would not be enough.
Where can I find the option to have the IRS figure the penalty for me?
I do not see anything of the sort when navigating to
Other Tax Situations > Additional Tax Payments > Underpayment Penalties
and answer the questions.
I don't believe there is an option in TurboTax to allow the IRS to calculate your penalty. But they will do that when you submit the return and send you a notice if they disagree with the penalty TurboTax calculates. In that case, you would either get a refund of the over paid amount of an invoice for an amount due.