Refund of Underpayment Penalty

Forum|Forum|6 years ago
July 7, 2020
8 replies
46 views

Hi --

Two of my clients have recently told me that the IRS sent them refund checks in the exact amount of their underpayment penalty for 2019. In both cases, the clients had significantly underpaid their taxes throughout the year, so I was not surprised that ProSeries calculated penalties for them.

This was for the 2019 tax year, and we filed on time, in early 2020. In both cases, the clients had paid in around 65% of what they owed for 2019, and the software calculated penalties of a few hundred dollars (around 2.5%). That all seemed reasonable to me.

So why is the IRS giving it back to them? Was there a general amnesty for 2019 on underpayment penalties that I don't know about?

Thank you!

Heather

ProSeries Basic

This topic has been closed for replies.

Best answer by BobKamman

Did you prepare the 2018 returns? Did the filing status stay the same? When you rolled over the 2018 return to 2019, it should have kept the 2018 tax data needed to populate the Form 2210. At least, that's how it works in ProSeries Pro. Otherwise, you have to enter the 2018 tax on the 2210.

And remember, if the penalty is less than $100, check the box to let IRS calculate it. Because they won't.

BobKamman

Level 15

Why had they paid in only 65% of their 2019 tax? Maybe they were estimating it based on 2018? Maybe they qualified for the exception to the penalty, based on 2018 tax.

hclistonAuthor

Level 5

Thank you, Bob. That's a good start. In both cases, the amounts the clients paid in during 2019 was more than their total tax liability for 2018. So they qualify for that exception to the penalty.

But why did Intuit ProSeries Basic calculate a penalty for them? In future years, do I have to manually recalculate the penalty?

BobKammanAnswer

Level 15

Did you prepare the 2018 returns? Did the filing status stay the same? When you rolled over the 2018 return to 2019, it should have kept the 2018 tax data needed to populate the Form 2210. At least, that's how it works in ProSeries Pro. Otherwise, you have to enter the 2018 tax on the 2210.

And remember, if the penalty is less than $100, check the box to let IRS calculate it. Because they won't.