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Why am I being charged for underpayment of estimated taxes when I do not pay estimated taxes throughout the year?

 
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Why am I being charged for underpayment of estimated taxes when I do not pay estimated taxes throughout the year?

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

Why am I being charged for underpayment of estimated taxes when I do not pay estimated taxes throughout the year?

If you owe $1000 or more you should have been making estimated payments so the program will calculate an estimated underpayment penalty on the return.  Then the IRS may also calculate an additional underpayment penalty based on when  they actually get the full payment ... so file and pay asap to keep the penalities and interest from accruing further. 

Why am I being charged for underpayment of estimated taxes when I do not pay estimated taxes throughout the year?

that may be the issue. 

There will be no federal penalties for not paying in enough taxes during the year if withholding
1) and timely estimated tax payments equal or exceed 90% of your 2022 tax or
2) and timely estimated tax payments equal or exceed 100% of your 2021 tax (110% if your 2021 adjusted gross income was more than $150K) or
3) the balance due after subtracting taxes withheld from 90% of your 2022 tax is less than $1,000 or
4) your total taxes are less than $1,000

the lower of 1 or 2 is your required annual payment. under the simplified method for estimated tax penalties, 25% of this amount must be paid in by 4/18, 50% by 6/15, 75% by 9/15 and 100% by year-end.

failing this and being subject to penalties you can use the annualized installment income method.
this method requires knowing your income and deductions thru 3/31, then 5/31, then 8/31, and finally tear end which should be the same as the tax return. the income is annualized. taxes are computed on the annualized income and then de-annualized. your tax payments for each period must equal or exceed these amounts to avoid penalties

form 2210 page 3
https://www.irs.gov/pub/irs-pdf/f2210.pdf

state laws vary

 

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