Why would I have a late penalty if I paid my taxes in full last year??? It’s saying I have an underpayment penalty. I paid it in full.

[leighla17sisson]

I paid my taxes outright and now I’m trying to do mine for this year and it’s trying to say I owe $60 for an underpayment penalty. I did not underpay. I paid in full on time.

[VolvoGirl]

On your 1040 line 38? That's not for filing or paying late. And is not about last year. If you do not pay in enough tax from withholding and estimates, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your 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

[Vanessa A]

The estimated tax penalty is a penalty for not paying your taxes in full throughout the year. If you are seeing a penalty, you can go back into the program under Other Tax Situations>>Additional Tax Payments>>Underpayment penalties and select start or update next to Underpayment Penalties. These questions are meant to help you apply for the exemption to the penalties.

Some exceptions to the penalty are 

• You had $0 tax liability in 2022
• You paid 100% of your 2022 tax liability
• You paid 90% of your 2023 tax liability 
• You or your spouse (if you file a joint return) retired in the past 2 years after reaching age 62 or became disabled and you had reasonable cause to underpay or pay your estimated tax late

Did you enter the payments you made on your return? Does it show you have a tax due of any amount or are you getting a refund or breaking even? Look at line 26 of your 1040 to be sure that you are getting credit for the payments if you did enter them? If you did not enter the quarterly or other payments made or possibly entered them in the wrong location, follow the steps below to enter them in the correct spot.  If you entered them elsewhere, you will need to delete them from where you entered them.  

To enter your quarterly click the following after logging completely into your return
• Federal
• Deductions and Credits
• See full list 
• Show More next to Estimates and other taxes paid
• Start next to Estimated Tax Payments
Enter your quarterly taxes paid

If you did make the payments and they are entered, then you can go to Other Tax Situations>>Underpayment Penalties under Additional Tax Payments. Walk through the steps to fill out form 2210. 

To view your 1040 form:

On the menu bar on the left that shows. 

1. Select Tax Tools
2. On the drop-down select Tools
3. On the pop-up menu
4. Select View Tax Summary
5. On the left sidebar, select Preview my 1040

In the desktop version simply click on Forms mode.