Per the IRS, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller.
The exact calculation and Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, will not be included with the copy of your tax return. The IRS does not require this unless you're requesting a waiver, you're annualizing, you're treating your withholding as paid when actually withheld, or your filing status changed from or to married filing joint between 2019 and 2020.
The amount that TurboTax calculates is just an estimate. You do have the option of electing to have the IRS calculate the underpayment penalty and paying it when the IRS calculates the amount and mails you a notice.
To review your underpayment and/or change your election, please follow the instructions below:
- Open your return.
- Search for underpayment penalty with the magnifying glass tool at the top of the page.
- Select the Jump to link at the top of the search results.
- Follow the on-screen instructions.
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