Question

Underpayment Penalty

Forum|Forum|6 years ago
February 28, 2020
1 reply
0 views

My return shows I owe an Underpayment Penalty of $26. This is a result of under-withholding by $132 on a Total Tax of $21350. Is this correct that I owe a $26 penalty on less than a 1% miss on withholding?

SteamTrain

Employee

On the face of it, that doesn't seem right..

BUT

IF, in addition to your withholding, you made any separate Quarterly Estimated tax payments late in the year (fewer than 4 payments) , or made 4 unequal Quarterly Estimated tax payments during the year, that penalty could easily be correct, based on the initial default calculations used. If this is your situation, you could "possibly" reduce the penalty by running thru the Annualized Income method (form 2010AI ) , But that's a pretty painful process and not likely to be worth the effort for $26.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

C

ComptonwoodsAuthor

During the year we made four quarterly estimated payments. 800,800,800, 4000. The last was higher as we then knew what our capital gains hit would be.

H

HelenC12

You could try and reduce the penalty by using the Annualized Income Method.

See the instructions below. Keep going, and when you get to the Annualized Income Method screen, answer Yes if you want to see if we can reduce the penalty.

We'll automatically generate a Form 2210 if your return needs it. Or you can revisit this section:

Sign in to TurboTax and open or continue your return.
Search for underpayment of taxes.
Select the Jump to link in the search results.
The Underpayment Penalties screen will display the penalty amount. Select Continue to review this section and make any needed adjustments.
- Note: If you see No Underpayment Penalty, you either haven't entered your income and/or estimated tax payments yet, or you aren't subject to an underpayment penalty.