I have a farm client who made a proper one time federal estimate for tax year 2022 prior to 1-15-23. The program is computing under payment penalty when the return was completed and the balance due paid prior to 4-18-23. This is incorrect. I have tried a variety of entry options. I cannot create a return that does not show under payment penalty. Any suggestions? Is this a program flaw or an entry problem?
Well…. Paying all the 2022 estimates on or about 1/15/23 doesn’t cure the underpayment of estimated tax penalty. The payments were due 4/15, 6/15, 9/15/22 and 1/15/23.
The software will calculate the penalty based on the dates the payments and amounts that were made.
Don't farmers and fishermen have some special deal where as long as all the tax is paid by March 1st its considered on time?
@taxman did you complete the 2210-F?
"as long as all the tax is paid by March 1st its considered on time?"
Sort of:
https://www.irs.gov/faqs/estimated-tax/farmers-fishermen/farmers-fishermen
There is a different safe harbor for them, too. But...
"when the return was completed and the balance due paid prior to 4-18-23."
makes it out of compliance.
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