Why do I have an underpayment penalty fee in the summary ( before submitting return) yet when I search for why I have a penalty fee, Turbo states I don’t have a penalty?

[ixchel_b3]

As a single parent (no other adult help) the Fee of $274 is a lot of money to me. If I legitimately owe it, I will pay it. But I should know why and how to make sure it doesn’t happen again. Thank you!

[VolvoGirl]

Do you have a penalty on 1040 line 38?  It's not for filing or paying late.  It doesn't have to do with last year's tax return or not paying estimates for this year.  The penalty is an "estimated" amount.    It's a penalty if you owe too much or for not paying in enough withholding during the year or not paying in evenly.  Even if you are getting a refund you can still owe a penalty.  It's very common and normal and expected for the IRS or state to bill you for more or send you a 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

[DianeW777]

Yes, I agree.  An underpayment penalty will occur for the following reasons. The IRS tax system is pay as you go, so when you received income the IRS wants the tax dollars at the same time.

Generally, you can avoid the penalty if your total timely estimated payments and withholdings are greater than or equal to the lesser of:

• 90% of the total tax after credits for the current year, or
• 100% of the total tax after credits in the prior year
• See one exception below.

You can also avoid the penalty if the amount you owe is less than $1,000 as long as any estimated tax payments you made are timely.

Note: High-income taxpayers. If your adjusted gross income (line 11 of your 2023 Form 1040) is greater than $150,000 (or $75,000 if you're married and file a separate return from your spouse), you can avoid a penalty by paying at least 110% of your total tax from the prior year.

If you are using TurboTax Desktop you can switch to Forms to review the tax liability and penalty.

You have access to all forms when you choose to print your return in TurboTax Online/Mobile.  However you are required to pay before printing, but do not have to file until you are ready. Review Form 2210 or worksheet for the penalty calculation using the information above.  Have last year's return ready if necessary.

• Can I print a copy of my return in TurboTax Online before filing?

And as indicated by VolvoGirl you can follow the steps for the Underpayment Penalty.

• Search (upper right) > type underpayment penalty > click the Jump to.. link to begin

@ixchel_b3