Question

Turbo tax says I underestimated taxes and now have to pay $45 penalty. And I also went on IRS website and it says I do not owe anything. Is this an error with Turbo Tax?

Forum|Forum|5 years ago
February 27, 2021
1 reply
0 views

As part of this years return, Turbo Tax says I had an uncommon situation in that I owe a $45 penalty due to under estimating past taxes. It refers to form 2210 which I never have filed in the past. I checked IRS website and it says I owe nothing. How do I file this years return? How do I correct this?

TurboTax Deluxe Online

VolvoGirl

Employee

It's not for owing on a prior year. It's for this year.

If you do not pay enough tax, 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

2

2020f-ithAuthor

I owe this year $5300. So, I paid taxes "regularly" through my work place this year. I am not self-employed. Not sure of this "uncommon situation". Never had this happen in the past. Penalty doesn't make sense.

MaryM428

Last year many people collected unemployment benefits and will owe income tax on those benefits if it was not withdrawn when unemployment was paid. If that is the case with your return there is a bill in Congress that is asking that the first $10,200 in unemployment benefits not be taxed at the federal level.

You taxes owed could also be because of a mistake in entering the amount of income and taxes withheld. Go back through your return and make sure all of the information entered is correct. Pay particular attention to the W-2 entries for income and withholding.

If you do owe the additional money, you can usually have the penalty forgiven if this is the first time you underpaid income taxes. You can also set up a payment plan with the IRS to pay the amount due in installment payments.

Here are some payment options from the IRS.

@2020f-ith