I am doing my 2023 taxes using TurboTax and it said I owe underpayment penalty(which I agree) and it was giving me few options to see if this penalty can be waived and one such option is as below:

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I am really not sure what it means by this part "you may elect to treat the tax withheld as paid when it was actually withheld"

Any tax withheld as part of paycheck isn't already considered as "paid"??

2 Answers 2


Uderpayment penalty applies even if you paid all the tax owed, but not in the same period in which the taxable income was received. So for example, if you received most of your income in Q1, but only paid estimate tax in Q4 - even if it amounts to the total tax, you'll owe underpayment penalty because you didn't pay it in Q1.

Making this election allows you to determine the time of the withholding compared to the timing of the income. This election may potentially reduce your underpayment penalty. By default withholdings are treated as made equally throughout the year, in reality they're not.


This corresponds to checkbox D in Part II of Form 2210. Basically, when you enter the tax withheld per quarter in line 11 of Form 2210, the instructions say that by default, you must enter 1/4 of your tax withholding for the year in each quarter. This might be advantageous if your tax withholding was "backloaded", i.e. you withheld more in later quarters than earlier quarters, but it can be disadvantageous when your withholding was "frontloaded", i.e. you withheld more in earlier quarters than later quarters. In cases when tax withholding was "frontloaded", checking checkbox D can help to reduce or eliminate your underpayment penalty.

I believe that when you choose to check checkbox D, then you would count amounts actually withheld (e.g. from your paycheck) from Jan 1 to Apr 15 under 1st quarter, from Apr 16 to Jun 15 under 2nd quarter, from Jun 16 to Sep 15 under 3rd quarter, and from Sep 16 to Dec 31 under 4th quarter. (Note that Jan 1 to Apr 15 is 3.5 months, which is more than 1/4 of the year, but Jan 1 to Jun 15 is 5.5 months, which is less than 1/2 of the year, and Jan 1 to Sep 15 is 8.5 months, which is less than 3/4 of the year, so if your withholding was even, for 2nd and 3rd quarters, this may actually be worse than the 1/4 per quarter default. Only if the numbers show higher withholding than the default would you use this option.)

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