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why do I need to pay for an underpayment penalties?

Forum|Forum|4 years ago
April 6, 2022
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This is the first time I ever saw an underpayment penality on my tax return of turbo tax. And I tried the other software, which mentioned i don't have any underpayment at all. Then turbotax keeps mentioned that i have around $100 penalty and didn't generate any 2210 form for me. Is it a software bug?

Best answer by Mike9241

here's how to check. 1) for each period 1/1 - 3/31, 1/1-5/31, 1/1-8/31, and for the full year your withholding (1/4 is credited each quarter as a default but you can use your actual withholding for the period) must equal or exceed 90% of 2021 tax or 100% of 2020 tax (110% if you 2020 adjusted gross income is over $150,000) or 2) your 2021 tax is $1000 or less or 3) 90% of your 2021 tax less withholding is $1000 or less.

in many situations, the IRS does not require form 2210

this may be a way to see it

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.

M

Mike9241Answer

here's how to check. 1) for each period 1/1 - 3/31, 1/1-5/31, 1/1-8/31, and for the full year your withholding (1/4 is credited each quarter as a default but you can use your actual withholding for the period) must equal or exceed 90% of 2021 tax or 100% of 2020 tax (110% if you 2020 adjusted gross income is over $150,000) or 2) your 2021 tax is $1000 or less or 3) 90% of your 2021 tax less withholding is $1000 or less.

in many situations, the IRS does not require form 2210

this may be a way to see it

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.

DawnC

Employee

Underpayment penalties are assessed if you don't withhold or pay enough tax on income received during each quarter. In fact, it's entirely possible to get hit with an underpayment penalty even though you paid your tax bill in full by the April deadline or are getting a refund. Form 2210 is included with your tax return if you have an underpayment penalty - Did you select the option to Let the IRS bill you? This option would not require the form.

To revisit this section, search for penalty and use the Jump to penalty link to be taken to the Underpayment penalties. You can try annualizing your income if your income in 2021 was sporadic. Form 2210AI will be included with this option.

At the end of that section, you will be given the option to "Let the IRS bill me later''. If you select this option, you don't use Form 2210. But if you want TurboTax to calculate the penalty for you, or you want to apply for a waiver of the penalty, or if you want to use the annualized income method to lower or eliminate the penalty, Form 2210 will be included with your return.