I underpaid by about $5K due to wife retiring and getting social security payments 2023 year with no taxes taken out.

I think the penalty is around $300.  There is a form that can be filled out that might absolve this, but it is confusing, takes a lot of research and maths, and says right on the form that it is likely to take 4 hours to complete.

Should I just pay this and suck it up, or get a tax guy to look at my things? I use H&R Block tax software, so my taxes are already done except for this possible form.  How much would a tax guy likely charge me, as in, more than $300?

This appears it may be a cumulative thing, as she has been on SS since mid 2022, and for that tax year I think we underpaid by $12K without a penalty.

Thanks,

I withhold nothing all year long and write the parasitic cocksuckers a check every year in the 11th hour. Last tear the penalty on $20ish k owed was $200something dollars.

Fuck them, Ukraine can fucking wait for their money.

Picking up my return today, fuck the motherfuckers, vigorously,violently and for great duration.

ETA: tax preparation fees are deductible. I use a proper CPA and he charges $500

Saw you post in another thread, if you can spare a minute.

@SiVisPacem

Tax prep fees are no longer deductible as itemized deductions on a Schedule A.

If you are filing a Schedule C (Self-Employment), Schedule E (Rentals and/or K-1's), or Schedule F (Farming), they are deductible there, as they are then considered business expenses.

The form you are most likely referring to is IRS Form 2210. It can take a while to complete, but I'd be shocked if it took four hours-unless you have no records, whatsoever, and you are having to recreate them as you go.

One part of the form (Schedule AI) allows you to do what's called annualize your income in an attempt to lower the penalties. In a nut shell, this is helpful if your income fluctuates significantly during the year because of things like your business is highly seasonal, you got bonuses late in the year, or you sold a lot of stocks at a significant gain at a particular point during the year. Basically, you tell the IRS how much of your annual income was earned prior to each of the three estimated payment dates during the calendar year and by the end of the calendar year (April 15th, June 15th, September 15th, and then December 31st). If your income was earned in a particular quarter (especially 4th quarter), it'd be difficult to estimate tax liability in April, June, and September, so the IRS may cut you some slack.

I don't know about H&R Block's software, as I've never used it, but I know our software (I work for TurboTax) allows you to complete the Form 2210 as part of the filing process (for TurboTax Online users, it's in the Other Tax Situations section of the Federal return, after Deductions and Credits).

I wouldn't seek out the help of an EA or CPA simply to complete the 2210. It should be able to be completed within the software. If you can't get help from their customer service folks, just remember, TurboTax Live Assisted has people such as myself who are available to help walk you through it while on the phone with you when you use our software.

As I said in another thread, the IRS is kind of like the mob when it comes to withholding and estimated payments. A loanshark won't wait until April for payments on a debt you started accruing the previous January. If you don't pay them enough as the year progresses they'll take a baseball bat to your knees. Similarly, the IRS wants some of their money either every payday or every few months. If they don't get enough, they hit you with their version of a baseball bat: underwithholding penalties and interest.

FYI: If you get hit with certain penalties, but haven't had any for the preceding three years, you MAY qualify for First Time Penalty Abatement, which is the IRS version of a mulligan, or do over. IF you qualify, they'll abate, or waive, the penalties and any interest accruing form those penalties. there are rules to follow, though, such as you have to wait for the tax burden to have been paid before asking for FTA, otherwise, the next day you get a new failure to Pay Penalty and you've shot your abatement wad already.

Thanks for that, although a $500 deduction in taxable income was largely meaningless, in much the same way as paying a penalty for not pre-paying is. I appreciate that nonetheless.

If Congress doesn't do something to either extend or make permanent the changes under the Tax Cuts and Jobs Act of 2017, they'll sunset at the end of 2025 and tax prep fees will once again be deductible on Schedule A beginning in tax year 2026.

The standard and itemized deductions were some of the biggest changes under TCJA. The standard deduction nearly doubled, certain miscellaneous itemized deductions (tax prep fees, employee business expenses, and some were) were all but eliminated, the state and local taxes (SALT) were capped at $10k, and mortgage interest deductions were limited if the mortgage was worth over $750,000.

It also doubled the Child Tax Credit, eliminated the Personal and Dependent Exemptions, completely revamped the tax brackets, created the Qualified Business Income Deduction (QBID, aka Section 199A deduction), and more.

it'll be interesting to see what happens if those changes aren't extended or made permanent. A lot of taxpayers are going to be shocked come tax time, that's for sure.

I did my taxes via H&R block also, it gave me an option to calculate the penalty myself or to let the IRS determine the amount and if the penalty is applicable(which I opted for).
I paid the $4k or so due with my return in mid-Feb and haven't heard anything yet.  
I'm told that you often won't hear anything back for underpayments of only a few $k.

Thank you all.  I will take one more look at the form when I get a minute.

I was under the impression that if you paid 90% of the previous years total tax due you wouldn't be penalized for the current years underpayment.

Below is from the irs website.  It seems like a reasonable rule since anticipating taxes can be very difficult in some situations.  

I didn't understand this.  I paid all of my tax the previous year.  Or does it mean I paid that amount, but for this year? My tax software said I owed the penalty. I am pretty sure we made less this tax year than the last one, since my wife retired. (we haven't need to tap into investment income resources)

Is the penalty a fixed amount regardless of the underpayment amount?  If this is the case, I won't change anything for next year.

Thanks,