Why is Turbo Tax Assessing a Prepayment Penalty?

[jonic]

I converted funds from my 403B to a Roth on July 7 and paid estimated taxes through the IRS website on August 2 (within the same quarter). But Turbo Tax is assessing me a prepayment penalty.  Why? I paid my estimated taxes properly but I don't think Turbo Tax asks you the date of the conversion so it must think I did it in an earlier quarter? How do I fix this? I don't want to have a penalty on record with the IRS when I did nothing wrong.

[Opus 17]

The IRS assumes that all income is earned evenly throughout the year, so payments must also be made equally throughout the year. Therefore, the default assumption is that you owed 1/4 of the estimated taxes in April, 1/4 in June, 1/4 in September and 1/4 by January 15. Because you did not make estimated payments in April or June, TurboTax thinks you owe a penalty. 

You should be able to sort this out by using form 2210 the penalty estimation form and telling the program to use the “annualized” method.  With the annualized method, you report your income actually earned and your taxes actually paid in the 4 quarters of the year, to show that you paid the right amount of taxes for the amount of income earned in each quarter.  if TurboTax doesn’t automatically take you to this form, it should be listed on the page for “other tax situations“.