Why do I have a $126 Penalty/Interest on my 2023 Tax return? How do I find out what that fee is to prevent in future and possibly reverse the charge?

Forum|Forum|1 year ago
May 23, 2024
4 replies
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I owed Fed over $4000 dollars in taxes and refund on State tax of less than $1000. 2022 also I owed around this much to Fed and I paid in full amount both years. Don't know where the penalty is coming from. It is showing on Line 38.
Thanks for any reply.

TurboTax Deluxe Online

Best answer by Bsch4477

A federal tax debt greater than $1000 will incur a penalty. If this is the first time you have been assessed this penalty you can ask that it be waived.

https://www.irs.gov/payments/underpayment-of-estimated-tax-by-individuals-penalty

Bsch4477Answer

Employee

ppulickalAuthor

Hi Champ, thank you for your explanation and resolution possibility. This is the first time we got penalty. But I don't think we meet the waiving criteria from the link you provided. I think there is no other way for us, is there?
Thank you though.

Mike9241

here's what you must do with your withholding and estimated tax payments to avoid a penalty in 2024

There will be no federal penalties in 2024 for not paying in enough taxes during the year if withholding
1) and timely estimated tax payments equal or exceed 90% of your 2023 tax or
2) and timely estimated tax payments equal or exceed 100% of your 2023 tax (110% if your 2023 adjusted gross income was more than $150K) or
3) the balance due after subtracting taxes withheld from 90% of your 2024 tax is less than $1,000 or
4) your total taxes are less than $1,000

ppulickalAuthor

Thank you for your reply.

VolvoGirl

Employee

For next year you need to increase your withholding and/or send in quarterly estimated payments so you don't end up owing so much.

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

VolvoGirl

Employee

You didn't have a penalty for 2022 and you owed over 1,000 then too? Did you check line 38? Maybe you missed it. Did you use Turbo Tax for 2022? Oh you probably avoided it based on your 2021 return.