turbotax underpayment penalty 2020

by: ... Tax Changes and Key Amounts for the 2020 … Updated: March 1, 2020. This column discusses the IRS’ under-withholding penalty and which individuals need to consider making federal estimated tax payments during 2020 in order to avoid this penalty in 2021. Is it because I did not pay in Q1? The IRS lowered to 80 percent the threshold required for certain taxpayers to qualify for estimated tax penalty relief if their federal income tax withholding and estimated tax payments fell short of their total tax liability in 2018. Ways to Avoid IRS Underpayment Penalties There are several options for penalty relief if you end up owing more in taxes than you anticipated. Why is there a penalty? Turbo Tax says I have to pay an Estimated Tax Underpayment Penalty of $59. This rule is altered slightly for high-income taxpayers. In response to the Coronavirus (COVID-19) pandemic, the Treasury and IRS issued new guidance that calls for a tax deadline extension, moving the customary April 15 deadline to July 15, 2020. The quarterly deadlines for the 2020 tax year are April 15, June 15, Sept. 15 and Jan. 15, 2021. You may be on the hook for a fine from Uncle Sam known as the penalty for underpayment of estimated tax.. Read on to get the lowdown on the penalty and how to determine whether you owe it and how to calculate it. ... To avoid an underpayment penalty from the IRS, you … Skipped some tax payments last year? The standard penalty is 3.398% of your underpayment, but it gets reduced slightly if you pay up before April 15. Thanks, 0 4 454 Reply. The IRS will not charge an underpayment penalty if you pay at least: 90% of the tax you owe for the current year, or; 100% of the tax you owed for the previous tax year. The IRS recently announced they will now waive the penalty for underpayment if you at least paid 80% of your 2018 tax liability, further reducing the relief IRS originally announced on Jan.16. The rates will be: 3% for overpayments (2% in the case of a corporation); 0.5% for the portion of a corporate overpayment exceeding $10,000; 3% for underpayments; and Read more to learn about the relevant details and how they impact your situation. If you had zero tax liability in the prior year and were not required to file a tax return, even if you are required to pay estimated tax in the current year, you will not be subject to an underpayment penalty. So let's say you owe a total of $14,000 in federal income taxes for 2020. So I made an estimated payment for Q4 before 1-15-2020 to cover the under payment to comply with the IRS rules above. The Internal Revenue Service today announced that interest rates will decrease for the calendar quarter beginning July 1, 2020. 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