Question

I paid quarterly estimated taxes on time but still have an underpayment penalty.

Forum|Forum|4 years ago
April 6, 2022
1 reply
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For my 2021 ES taxes, I paid at least 100% of my 2020 total tax, which was $3800.

Although my quarterly payments were $950, I overpaid slightly. All payments were all on time, but uneven.

ES01 paid in February 2021: $800

ES02 paid on 3 April 2021 (before the Q1 deadline): $1200

I had paid $2000 before the Q1 deadline, so I did not make a payment before the 15 June Q2 deadline.

ES03 paid in August 2021: $1000

ES04 paid in December 2021: $1000

Total ES payments: $4000

However, TurboTax still said that I owe an ES underpayment penalty for 2021. Luckily, it is small; but could anyone explain why I was penalized at all? What should I have done?

LenaH

This could happen if your Adjusted Gross Income is over $150,000 ($75,000 if your 2020 filing status was married filing separately). For filers with an AGI over this amount, you have to pay at least 110% of your 2020 tax liability.

If your 2020 total tax was $3,800, you would have had to pay at least $4,180. This would have produced a small penalty.

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R

RutaAuthor

Thank you for replying!

Although I wish my AGI were that high, it was well below the $150,000 ($75,000) threshold for both 2020 and 2021.

Could there be any other reasons for the penalty?

M

mglauner

If you didn't pay the correct amounts in the right quarters, that may be why you are being assessed a penalty.

On the Estimated Payments screen, try leaving the quarterly dates that TurboTax filled in and enter $1,000 for each of the four quarters as Amount Paid to see if this resolves your issue.

Although you paid on different dates and different amounts, the net out is that you made $4,000 in Estimated Payments, which was more than enough to cover your tax.

Click this link for more info on Underpayment Penalties.