Underpayment penalty not correctly calculated

Yes, you can skip the 2021 federal underpayment penalty calculation using TurboTax Premier. 

 

To remove the underpayment penalty, please follow the instructions below:

1. Open your return. 
2. Click on Federal Taxes tab.
3. Click on Other Tax Situations.
4. Scroll down to Additional Tax Payments and click Start next to Underpayment penalties.
5. Continue through the pages.
6. On the page Let the IRS Bill Me Later, answer Let the IRS Bill Me Later to remove the penalty from your return. 

you can't skip the 2210 because the IRS will hit you with a penalty.

the IRS presumes income is earned evenly over the year. therefore. 1/4 of your taxes were due each period 

which is not the case.  it will compute the penalty based on the above and subtract it from any refund due you and if your refund is not enough to cover the penalty you'll get a bill

 

to avoid this

 

you must use the annualized income method to minimize or eliminate your penalty. (on page 3 of 2210)

see the instruction because this gets complicated 

 

 

each column in the annualized income installment worksheet must be computed for

1/1-3/31

1/1-5/31

1/1- 8/31

the 4th column should be automatic and be the same as for the 1040

 

@Mike9241 has the dates needed for the annualized income method. You state that you calculated investment each quarter and made estimated payments. To put all the moving parts together, you want the total of income earned during that time period.

1/1-3/31 - all wages, investments, etc earned during that period

1/1-5/31 - all income for this time period

1/1-8/31- all income earned between Jan and end of Aug will be in this bracket.

The last bracket will include your rollover from Traditional to Roth. This lets the program know that the income should not be taxed prior to this time period.

 

This should reduce / eliminate your tax.

 

You can get there as follows:

1. Search for underpayment of taxes.
2. Select the Jump to link in the search results.
3. The Underpayment Penalties screen will display the penalty amount. Select Continue to review this section and make changes.

The form 2210 is expected to be finalized and in the program tomorrow. Your numbers may not be right until the final form is ready. For the latest federal forms updates see IRS forms availability table for TurboTax individual (personal) tax products