Underpayment Penalty

[Pattyhass1]

Turbo Tax is calculating an underpayment penalty but I paid over 100% of my prior year tax liability and 97% of this year's liability.  Does that rule not apply if it's over $1,000?

[MarilynG1]

Form 2210 calculating an underpayment penalty can be a bit tricky.

If you imported your 2022 return, go to Other Tax Situations > Underpayment Penalties and answer the questions about your 2022 return.  This may resolve your issue immediately.

Otherwise, type 'annualizing your tax' in the Search area, and 'Jump to annualizing your tax' and go through the steps in that section.

Let us know if this doesn't resolve your issue.

Here's more discussion on Underpayment Penalty.

[Mike9241]

you should also review form 2210 to see why there is a penalty computation.  you can meet the 90%/100% rule for the whole year but under the default method 1/4 of that amount must be paid in on or before each of the following dates 4/15/2023, 6/15/2023,9/15/2023, 1/15/2024.

if you had a large amount of income if the later part of the year and paid an estimate to cover the taxes, under the default method there would be penalties for the earlier periods. the only way to avoid this is to use the Annualized Income Installment Method on page 3 of the 2210