After entering my 2021 tax details, TurboTax is charging me an underpayment penalty.
According to IRS, penalty is generally not owed if ones withholding + estimated tax payments for 2021 are greater than 100% (or 110% for high income) of the tax paid for the 2020 tax year. This is my case, hence I should not need to pay a penalty. Reference: https://www.irs.gov/instructions/i2210.
However, since I did not file my 2020 taxes with TurboTax it can't know how much taxes I paid in 2020, hence it can't possibly take that into account.
How can I make TurboTax aware of my 2020 taxes, so it can take that into account and not charge me an underpayment penalty?
Actually, I do get this question. It just appears on the next screen for me.
However, this screen asks for an amount from my "2020 Form 2210, line 4 or Form 2210-F, line 6". I do not have form 2210 / 2210-F in my 2020 taxes. This form is only required if paying a penalty, which I did not in 2020. That's why I skipped it so far.
Anyway, I just looked up the IRS instructions for 2210 and line 6 can be derived from Form 1040, line 25d. So I entered that amount and it finally eliminated my penalty.
IRS instructions for filling form 2210: https://www.irs.gov/instructions/i2210#en_US_2021_publink[phone number removed]
This resolves the issue. Thanks.
You can go to Other Tax Situations to visit the Underpayment Penalties in the Additional Tax Payments section.
I actually went through the Underpayment Penalties in the Additional Tax Payments section. But nowhere in this flow does it ask for 2020 taxes.
Follow these screens, you should be able to get to the part where you can enter your 2020 tax liability, etc.:
As I mentioned before, I did go through this flow. It does not ask for the 2020 tax liability amount. Can you take a screenshot of a screen that asks for that amount? Because I’m not getting there and I don’t see it in the screenshots you attached.
Thanks for your help!
Oh interesting, here is what I get in the same screen. It asks me for the 2020 Filling Status, but not for the 2020 Tax Liability. Do you know how I can fix this issue?
Actually, I do get this question. It just appears on the next screen for me.
However, this screen asks for an amount from my "2020 Form 2210, line 4 or Form 2210-F, line 6". I do not have form 2210 / 2210-F in my 2020 taxes. This form is only required if paying a penalty, which I did not in 2020. That's why I skipped it so far.
Anyway, I just looked up the IRS instructions for 2210 and line 6 can be derived from Form 1040, line 25d. So I entered that amount and it finally eliminated my penalty.
IRS instructions for filling form 2210: https://www.irs.gov/instructions/i2210#en_US_2021_publink[phone number removed]
This resolves the issue. Thanks.
@msw555 So glad you were able to resolve this issue. Thanks for providing an update!