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May 16, 2021
Question

Turbotax is showing I owe $31 Underpayment penalty for underpayment of estimated taxes. I do not estimate. I"m employed

  • May 16, 2021
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1 reply

May 16, 2021

Taxes are pay-as-you-go. This means that you need to pay most of your tax during the year, as you receive income, rather than paying at the end of the year.

 

If you're underpaying, complete a new W-4 form. See How do I update my 2020 withholdings and print a new W-4?

 

You can choose to have the IRS figure your penalty.  

  1. Search for underpayment penalty.
  2. Click the Jump to underpayment penalty link.
  3. Go through the section for Underpayment Penalty and during that interview, one of the questions will ask if you would rather have the IRS calculate your penalty.  Answer Yes, and this will override any penalty TurboTax has calculated.  
  4. If you are liable for a penalty, the IRS will send you a bill for this amount. 

Tip: To reduce or possibly even eliminate your underpayment penalty,  search for annualizing your tax (use this exact phrase) inside TurboTax. This will take you to the underpayment penalty section and we'll take you through the steps to possibly reduce your underpayment penalty. (If you don’t see Jump to annualizing your tax in the search results, make sure you’re in your return and not on the Tax Home page.)

 

 

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