Where is Form 2210, since Turbo Tax has calculated an estimated tax penalty?

[kamull01]

Where is Form 2210: Underpayment of Estimated Tax by Individuals, Estates, and Trusts?? And the Form 2210 Underpayment Penalty Worksheet? Turbo Tax 2024 calculated a penalty of $6, so there should be a worksheet to show how it was calculated.

Turbo Tax calculated this estimated tax underpayment penalty because I did not pay the 1st quarter estimated tax payment on time. Turbo Tax says the penalty is $6. Is this the actual penalty? Or is it a Turbo Tax estimate? After Turbo Tax submits it to the IRS, does the IRS go with the Turbo Tax calculation? Or does the IRS re-calculate it and take a different amount from the refund?

[DoninGA]

Click on Federal Taxes (Personal using Home & Business)

Click on Other Tax Situations

Under Additional Tax Payments

On Underpayment penalties, click the start button

[baldietax]

You can get to Form 2210 by double-clicking on Form 1040 penalty line then double clicking again on the worksheet penalty line to see Form 2210.  From what I've seen Form 2210 doesn't appear in the forms list by default unless you've gone thru the deeper Annualized Income (AI) process for uneven tax by quarter.

$6 isn't an TT estimate it's a final calculation using Form 2210 which is pretty straightforward.  Presumably IRS checks it.  Underpayment penalty rate is currently 8%.  You can also have IRS calculate it and send you a bill, but not worth it for small penalty easily calculated with your return and be done with it.

[kamull01]

I went to Federal Taxes > ‘Other Tax Situations’  tab > Additional Tax Payment > Underpayment penalties > Update.   It says “You have a penalty of $6. Do you want to see if you can reduce or eliminate the penalty?” I answered “ Yes”.  I answered the question about fishing and gaming (no), 2023 tax liability (transferred from 2023), 2023 AGI (transferred from 2023), and then answered “Do you want to annualize your income?” I answered “yes”.

Annualized Income
Most of my income and most of my withholding (pensions) is in the 4th quarter.

I entered accurate information for cumulative income for each of the 4 boxes (the end dates do not correspond to the end of a quarter). The penalty was $0. I did not elect to treat the tax as paid when it was actually withheld. There is a Form 2210 now and it is filled out. Line 19 Penalty is $0,   However, there is an exclamation mark by Form 2210 and it says “Not Done”.  ???

I went back and elected to treat the tax as paid when it was actually paid. I entered the figures for each of the boxes, paying attention to the end date for the box.   The Form 2210 now says the penalty is $1. The $1 penalty is assigned to the 2nd box for being 6 days late on the estimated tax payment.  And it still says “Not Done’.   ???

No matter whether I do annualized income only or both annualized income and treating the tax as paid when it was actually paid, both the Form 2210 and the Underpayment Penalty Worksheet have a column for 01/15/2025. It looks like it is expecting an installment of around $11K (!!) by that date. But, my tax obligation was already satisfied at the end of 2024 by the 2024 withholding and the total 2024 estimated tax payments that had been made in 2024.

I have tried to fill in the box on the Date of Payment screen, for “Date you will pay the balance due”. No date will work. Maybe, this is because today is after 01/15/2025. But, as I say, my tax obligation was already satisfied at the end of 2024 and I shouldn't have had any more installments to make.  If I had made an $11K estimated tax payment by 01/15/2025, I would be getting it back as a refund plus the refund that I already have coming.

Something seems not to be working right here??

[kamull01]

@baldietax,

Form 1040 does not have a penalty line to double-click on. It has line 34: amount overpaid and line 35a amount refunded to you, which is $6 less than line 34. That’s all the information on the 1040: these two figures with a $6 difference between them.

[baldietax]

@kamull01 there is line 38 "estimated tax penalty"

[baldietax]

as to your $6 I thought you were just curious about it, not sure it's worth going thru AI process to eliminate and I'm guessing the $1 left over is some sort of rounding error

[VolvoGirl]

@kamull01   The penalty is on line 38.  Yes I had a refund once and still had a penalty for not paying in evenly during the year.  And it is just an estimated amount.  I wouldn't bother about $6 .  And It's common and normal and expected for the IRS or state to bill you for more or send you a refund.

[kamull01]

@baldietax 

Aha!  I needed to scroll down to see line 38 on Form 1040.  When I double-click there on Form 1040, it brings up two other forms: the Info Wks and the 1040/1040 SR Wks. Then when I double-click on line 38 of the 1040/1040 SR Wks, it brings up Form 2210. Then when I double-click on line 19 of Form 2210, this brings up the 2210 Penalty Wks. So, thanks to you, I found what I am looking for. 

Yes, I was just curious.  The $6 is a small amount, but it was the numbers and how TT used them to arrive at the $6 that I wanted to learn.  Thanks to you, I found out.

[kamull01]

Well, now there’s a new wrinkle. Earlier, Turbo Tax (TT) had figured that I was 61 days late on the 1st Q estimated tax payment and that I was 6 days late on the 2nd Q estimated tax payment. According to the 2210: Underpayment Penalty Worksheet, it had calculated a $5 penalty for a 61-day late payment and a $1 penalty for a 6-day late payment. There were figures in the Form 2210: Part III: Penalty Computation (lines 10-19) to show how the $5 and $1 penalties were calculated. And the TT return shows that the $6 penalty is to be subtracted from my refund.

Today, I reached the Federal Review stage and there was 1 error. (I had not reached this section earlier because there were some forms that TT had not released yet and some 1099s that I had not received yet). The reported error was that on Form 2210 “C: Check to have the IRS figure the penalty and send a bill if a penalty is due”   was not checked. Given the figures I had seen earlier in Part III: Penalty Computation (lines 10-19) of the form, the penalty had already been calculated, but it was a TT calculation and not an IRS calculation.

But, given the particulars of the error (i.e., it says “have the IRS calculate it”, not let TT do it). and the difference between the result when the box is not checked (i.e., TT calculates it and it’s $6 and this is subtracted from the refund) and when the box IS checked (i.e., let the IRS calculate it and send a bill),  which means that there’s no penalty in this TT return and there’s nothing subtracted from the refund and the IRS will send a bill later when the IRS (and not TT) does the job.

I don’t know what to make of this. Will this TT return (assigning a $6 penalty) be successfully transmitted? Or am I forced to check the box in order for the TT return to be electronically submitted, and then be forced into dealing with a bill later from the IRS?

I’d rather have the $6 subtracted from my refund than have to deal with the IRS later. And that could happen, if I don’t check the box. But, the question now is: Will TT submit the return, even though the Form 2210: "C" box is not checked?

Or is it the case that the box must be checked in order for the TT return to be successfully submitted, but when the IRS gets this electronic submission, it will do the calculation itself and take the $6 (or whatever) from the refund on the spot before the rest of it is a refund to my bank account (i.e., no dealing with it later after an IRS bill is sent)?

[kamull01]

@VolvoGirl 

Another responder to my question about this says it isn't an estimate, but instead is a definite figure that the IRS  accepts and subtracts from the refund.  See @baldietax's first reply to the topic.

[baldietax]

you can ignore my comment on whether the penalty is estimated or final, I usually end up with some penalty and IRS agrees with the calculation, but go with @VolvoGirl advice

[kamull01]

@VolvoGirl 

You say that it's common and normal and expected for the IRS or state to bill you for more or send you a refund.

How does the IRS decide to bill you? vs take it from the refund and send you the reduced amount? 

Isn't it the case when there's a refund  and TT says that it has subtracted the penalty from the refund, and the refund is now that much less, that the TT return, when submitted, a) goes through successfully to the IRS, b) the IRS accepts the return, and c) the IRS deposits the refund minus the penalty in your bank account?  

Or does the IRS still refund the full amount and send you a bill for the penalty, even though you did not check the "C" box ("Check to have the IRS figure the penalty and send you a bill if a penalty is due") on Form 2210 : Underpayment of Estimated Tax?

[MonikaK1]

The IRS Instructions for Form 2210 state:

"If you didn't check box B, C, or D in Part II, you don't need to figure the penalty. The IRS will figure any penalty for underpayment of estimated tax and send you a bill. If you file your return by April 15, 2025, no interest will be charged on the penalty if you pay the penalty by the date shown on the bill. If you want us to figure the penalty for you, complete your return as usual. Leave the penalty line on your return blank; don't file Form 2210."

If the IRS calculates the underpayment penalty and there is a refund on the return from which to subtract it, they would normally deduct the penalty from the refund. 

If you entered the information to calculate the penalty yourself and it's shown on the return, the IRS will deduct the penalty from the refund.

@kamull01