Turbo Tax again this year failed to calculate correctly whether I owed a penalty for underpayment.I received a letter today from the State of NM saying we owed a penalty. Please identify the problem and fix this issue in the software.
The Federal program, and each state program, contain a topic in the interview asking if you want to calculate the penalty for underpayment of estimated tax. You can agree to do that or to allow the state to calculate it for you. You have to choose to calculate it yourself and then complete the interview to get estimated penalties. Even doing all that does not guarantee the penalty will be exact because the state calculates the penalty up until the time they receive and process your payment, and that may be some time after you file your return.
Yes I agree. Turbo Tax says I owe $21 for underpayment of my estimated taxes. Here's the problem, I didn't make any payments at all for estimated taxes. I don't pay quarterly estimated taxes because I'm not an independent contractor. I receive W2's for all of my employers which means the estimated taxes are already taken out before I receive each paycheck. If I were to make estimated tax payments I would be paying for taxes twice. I just do my taxes and tax payments straight up with no estimated payments. This is clearly an error on Turbo Tax's part. Please fix this.
The initial post was from than a year ago and was on a different subject (the original post was on estimated taxes in New Mexico whereas your issue appears to be with your federal taxes).
I would encourage you to post a new question to the community and to give us more details such the specifics that the IRS is referring to in that letter.
"pay estimated tax" refers not only to estimated tax payments using form 1040-ES but also your withholding on your paycheck. Unless you seriously under withheld on your paycheck, it's not common for an employee to be in this situation. However, without knowing specifics like the amounts in boxes 1 and 2 on your W-2, it would be difficult to say more.
Please make a new post so that all the members in the Community can see it.