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What if It says I owe money as a underpayment on estimated taxes and I have never estimated taxes?

What is a Form 2210?
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3 Replies

What if It says I owe money as a underpayment on estimated taxes and I have never estimated taxes?

That form calculates your penalty for not paying enough withholding either through estimated tax payments if you are self employed or have investment income or through your paycheck if you are an employee. 

Cynthiad66
Expert Alumni

What if It says I owe money as a underpayment on estimated taxes and I have never estimated taxes?

If you have a balance due instead of a refund when you file your tax return, the IRS could assess a penalty.

 

The IRS calculates this penalty by first figuring out how much you should have paid each quarter. Then, it multiplies the difference between what you paid and what you should have paid by the underpayment rate for that period. The IRS determines that rate for each quarter of the year.

 

For 2022, the rates are:

  • 3% for Quarter 1 (January-March), 4% for Quarter 2 (April-June), 5% for Quarter 3 (July-September), and 6% for Quarter 4 (October-December)

Click the link below for additional information regarding the form.

What is Form 2210

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What if It says I owe money as a underpayment on estimated taxes and I have never estimated taxes?

to avoid these penalties for 2023

There will be no federal penalties for not paying in enough taxes during the year if withholding and
a) timely estimated tax payments equal or exceed 90% of your 2023 tax or
b) timely estimated tax payments equal or exceed 100% of your 2022 tax (110% if your adjusted gross income was more than $150K) or
c) the balance due after subtracting taxes withheld from 90% of your 2023 tax is less than $1,000 or
d) your total taxes are less than $1,000

state laws differ

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2) is the easiest to comply with once you file your 2022 return because you know your tax liability and adjusted gross income 

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Turbotax likely generated forms 1040-ES because nit enough was paid in for 2022

you'll have to either increase withholding or make estimated tax payments for 2023 to avoid this penalty 

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