Why does TT say I owe a penalty if the total of my estimated payments met the safe harbor, and although quarterly payments differed, each exceeded 1/4 of the total ?

[RobertB4444]

It sounds as though you are up on this so this may be redundant.  To review - the safe harbor rules.

Your estimated payments need to equal 90% of this year's taxes or 100% of last year's taxes (if you make more than $75,000 as an individual or $150,000 as a married filing joint couple the amount of last year's taxes is increased to 110%).  

Since you said that you met the safe harbor then the second situation is that the four payments should be substantially equal in order to meet the requirements - unless your income is higher at certain times of the year versus other times, in which case you should "annualize" your income so that the IRS sees that you made your money more in one quarter vs another.

You said that each of your 4 payments was greater than a quarter of the safe harbor which indicates that you sent in MORE than the safe harbor amount.  If this is the case then the reason that TurboTax is charging a penalty may have something to do with the way the 2020 data has been carried over.  Make sure to review what has been entered into the system from last year to see that it matches your prior year return.

[ss77tt]

Robert,

  Thanks for your reply.  So how would I, "review what has been entered into the system from last year"?   My 2020 tax liability and adjusted gross income are carried over correctly.  Indeed I overpaid estimated taxes for every quarter of 2020.  Seems like I should not be penalized just because  these overpayments were not identical.   If I divide my total  estimated payments by 4 and use this figure for each quarter the penalty goes away.  Is this the only solution?

[ThomasM125]

@ss77tt

TurboTax is simply estimating your penalty for late payment of tax. Once you file your tax return, the IRS will do their own calculation and if you have not paid in the proper tax, they will bill you for the balance. So, if you are confident that you don't owe a penalty, it would be acceptable to enter the same amount for estimated tax like you mention.

One more thing however, if you end up owing a penalty and you did not enter the exact amount of estimated taxes you paid in each quarter, the TurboTax accuracy guarantee will not apply to that penalty.