Tax Penalty line 38 - 1040SR

Forum|Forum|1 year ago
February 24, 2025
2 replies
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I already e-filed my 2024 1040-SR. After reviewing my printed copy of the 1040-SR I discovered to my surprise a Penalty/Interest charge on my 2024 Federal Tax Return Summary. While preparing my 2024 taxes on TurboTax I was not informed or directed that there was an issue with an estimated tax penalty. After some research I now suspect the reason could be because my quarterly estimated tax distributions were uneven. I rolled over a substantial IRA to a Roth IRA in the last week of 2024. Therefore, I increased the last quarter estimated taxes accordingly. Is there anyway to correct this penalty/interest charge. Turbo tax already paid the penalty from my refund. Thanks

TurboTax Home & Biz Windows

VolvoGirl

Employee

No, but it is an estimated amount. The IRS might reduce it and increase your refund.

HGE747Author

Do you know when the IRS determines the finalized amount? Do I get a notification from them? Thanks

JohnB5677

Yes, if you've underpaid your taxes, you will get an IRS tax notice, but the IRS works at it's own pace. You can receive the notice at any time.

The IRS provide guidance on the Underpayment of estimated tax by individuals penalty.

The underpayment penalty will be assessed if any of these apply:

"If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty."
"You also may have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return."

To avoid the under payment penalty:

The amount you owe is less than $1,000, after subtracting withholding and refundable credits.
You paid 90% of the tax that you owed for the current year.
You paid 100% of the previous year tax, (110% for higher incomes).
If your previous year's adjusted gross income was more than $150,000 you will have to pay in 110% of your previous year's taxes to satisfy the "safe-harbor" requirement.

"Typically, underpayment penalties are charge a percentage of the underpaid amount, and they're capped at 25%.

Underpaid taxes also accrue interest at a rate that the IRS sets annually."

To avoid this situation it is recommended that you adjust your W-4 with your employer or pay estimated taxes.

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SharonD007

You can contact the IRS to request a one-time abatement of your underpayment penalty. For individual tax returns, call 1-800-829-1040, 7 AM - 7 PM Monday through Friday local time.

For more information, refer to the TurboTax help article Guide to IRS Tax Penalties: How to Avoid or Reduce Them.

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