Underpayment Penalty even with refunds. Roth conversion in Dec and est tax paid for that at that time.

Refunds of over $700 for both 2019 Fed and State filings - yet I have a $52 underpayment combined penalty. Why?

My tax obligation for my ongoing Soc Sec and pension income is sufficiently withheld throughout the year.

I decided late in 2019 to do a December Roth conversion and paid the full associated taxes on-line at that time. Without even knowing I'd do the Roth - I had no reason to do quarterly payments. And I recall being told that with an event such as this I could make the tax obligation at that time.

Is this correctly being done in Turbo Tax? Is there a way to correct? Or am I supposed to guess of a late year tax obligation ? Thank You , Bob

573

Expert Alumni

Mar 16, 2020 6:05:30 PM

It is possible to have an underpayment penalty and also receive a Federal refund.

The penalty is computed on IRS form 2210 and can be computed by the regular method or the short method. If you have access to the forms, you can review the computation.

Follow these directions to access the interview questions:

Down the left side of the screen, click on Federal.
Across the top of the screen, click on Other Tax Situations.
Under Your uncommon tax situations, scroll down to Additional Tax Payments.
Click Start/Revisit to the right of Underpayment Penalties.

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Underpayment Penalty even with refunds. Roth conversion in Dec and est tax paid for that at that time.