MI Tax Underpayment Situation - Penalty?

Have you entered all of your income, withholdings, and estimated tax payments?   Michigan:  Penalty and interest is charged for the following reasons:

• Estimated payments were underpaid in one or more quarters
• Estimated payments were received late
       Note: Payments that are not received by the due date will be applied to the following estimated tax quarter
• No estimated payments were received
• You received income unevenly during the year and did not annualize your income

The Michigan Department of Treasury follows the Internal Revenue Service (IRS) guidelines for estimated tax requirements. Based on the IRS estimated income tax requirements, to avoid penalty and interest for underpaid estimates, your total tax paid through credits and withholding must be:

• 90% of your current year's tax liability or
• 100% of the previous year's tax liability or
• 110% of your previous year's tax liability if your previous year's adjusted gross income is more than $150,000 ($75,000 for married filing separately)

Penalty is 25% for failing to file estimated payments or 10% of underpaid tax per quarter. Interest is 1% above the prime rate.

To possibly reduce or eliminate your underpayment penalty, open your return in TurboTax and search for annualizing your tax (use this exact phrase). This will take you to the underpayment penalty section, and we'll take you through the steps to possibly reduce what you owe.