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New Member
posted Apr 13, 2025 12:59:10 PM

Why might I have a 2023 tax liability/penalty when calculators confirm my withholding is set appropriately and I paid outstanding taxes in full?

TurboTax is telling me I fall into the "uncommon tax situation" of having a "underpayment penalties" - something I have never seen before.

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1 Replies
Expert Alumni
Apr 13, 2025 1:03:39 PM

If you're preparing your 2024 return, the underpayment penalty you see is for 2024 - not 2023. Your 2023 tax liability is just used to calculate whether you have a penalty for 2024.

 

For federal tax, if you have a balance due of $1,000 or more you may be subject to an underpayment penalty. To avoid this penalty, you will have had to pay at least 90% of your current year (2024) tax liability or 100%* of your prior year (2023) penalty. If, after entering your 2023 liability, TurboTax is calculating the penalty, you didn't pay the minimum required payment during 2024.

 

*110% if your income was $150,000 or more