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ckshepherd12
New Member

Why am I being charged a tax penalty or interest even though I am paying my taxes before July 15, 2020? How can I get this penalty removed?

 
1 Best answer

Accepted Solutions
VolvoGirl
Level 15

Why am I being charged a tax penalty or interest even though I am paying my taxes before July 15, 2020? How can I get this penalty removed?

On 1040 line 24?

 

If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year.  Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.

 

You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

 

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

 

 

View solution in original post

3 Replies
RobertG
Expert Alumni

Why am I being charged a tax penalty or interest even though I am paying my taxes before July 15, 2020? How can I get this penalty removed?

Is it an underpayment penalty?

 

Underpayment penalties are assessed if you don't withhold or pay enough tax on income received during each quarter.

 

In fact, it's entirely possible to get hit with an underpayment penalty even though you paid your tax bill in full by the deadline or are getting a refund.

 

Example: Joe is self-employed and estimated next year's tax bill at $20,000. Rather than making 4 quarterly payments of $5,000 apiece, he chose to pay $500 in each of the first 3 quarters, and the remaining $18,500 in the fourth quarter.

When he filed, his actual tax bill came to $17,270 and he got a $2,730 refund. However, he got hit with the underpayment penalty because he underpaid his estimated tax in the first 3 quarters.

 

Tip: To reduce or possibly even eliminate your underpayment penalty,  search for annualizing your tax (use this exact phrase) inside TurboTax. This will take you to the underpayment penalty section and we'll take you through the steps to possibly reduce your underpayment penalty. (If you don’t see Jump to annualizing your tax in the search results, make sure you’re in your return and not on the Tax Home page.)

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VolvoGirl
Level 15

Why am I being charged a tax penalty or interest even though I am paying my taxes before July 15, 2020? How can I get this penalty removed?

On 1040 line 24?

 

If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year.  Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.

 

You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

 

It's under

Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

 

 

View solution in original post

Anonymous
Not applicable

Why am I being charged a tax penalty or interest even though I am paying my taxes before July 15, 2020? How can I get this penalty removed?

also note that if you owe on a state return some did not extend the filing date as the IRS did. 

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