According to IRS.gov, Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when your return is filed. If you owe taxes this year, you will receive an estimated tax penalty if there wasn't enough taxes withheld or if there weren't enough estimated taxes paid. You must have taxes due that are more than $1000 this year. Form 2210 is used to figure the penalty you owe for the underpayment of taxes.
Although Turbo Tax may have made recommendations on the amount of estimated taxes paid last year, it based it's projections from last year's tax return. If your taxable income changed this year, Turbo Tax had no ability project this year's outcome such as the sale of your house and your unforseen investment gains.
You can possibly prevent this next year if you do the following. Please note, we'll automatically generate a Form 2210 if your return needs it but you may follow the steps listed below if you Note: You'll need your prior year tax return to answer the questions.
- Sign in to TurboTax and open or continue your return.
- Search for underpayment of taxes by selecting the search bar in the right side of your screen.
- Select the Jump to link in the search results.
- The Underpayment Penalties screen will display the penalty amount. Select Continue to review this section and make any needed adjustments.
- Note: If you see No Underpayment Penalty, you either haven't entered your income and/or estimated tax payments yet, or you aren't subject to an underpayment penalty.
(Optional) Keep going, and when you get to the Annualized Income Method screen, answer Yes if you want to see if we can reduce the penalty.
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