Virginia Underpayment Penalty triggered

[Babak]

My client has made VA estimated tax payments of $ 39,884 (in total) during 2023. His total VA tax liability came to $43,362 meaning he only owes $3,386. His returns however shows $1,710 for underpayment. I double checked and made sure I'd entered his estimated payments. I don't know where this penalty is coming, aside from the amount that is very high compared to what he owes, since he made estimated payments, he should not owe any penalties.

[IRonMaN]

Were the estimates paid evenly during the year or did the client pay more at the end of the year which means he was short early on?

[Babak]

He missed the first payment and paid double for the last one. Would that trigger this much of penalty?

[IRonMaN]

That could do it.

[Babak]

But isn't the penalty a lot compared to the amount paid and owed?

[itonewbie]

Review the computation of penalty assessed for each quarter and check that the dates and amounts used in these calculations are correct.

If your client was paid large amounts of income in certain quarters, you could then look at mitigating the penalty by annualization.  But based on the limited info you provided, that may not even be necessary.

[sjrcpa]

Is last year's VA tax entered? If 2023 estimates are more than last year's tax the penalty could be reduced.

Yes $1700 sounds high for the amount owed. As Jensen said, look at the calculation on the penalty form.