Arizona Underpayment calculation

[mh85251]

Arizona form 221 Underpayment penalty.

Line 1 says " I am claiming an exception from the imposition of the estimated payment penalty because I qualified for federal relief under IRC Section 6654."

The box next to line 1 is already checked when I open the form 221, but I can't figure out why it's checked, and the cross-reference for the field is no help.  There is no underpayment penalty on the federal return.

Seems like a programming error to me, but I may be missing something which is why I am posting this here, while I wait on hold for an hour and a half.

[IRonMaN]

If there isn't a penalty being generated, I would quit and call it good ----------------------- unless there is supposed to be a large penalty for AZ.

[RandyAZ · Accepted solution]

The instructions for AZ form 221 state that if you owe the feds less than $1000 on your 2019 1040, mark the box and do NOT complete the rest of the form.  I have had one client that this applied to this year. 

[katie2]

I have the same problem, but tax owed is more than $1000.

Line 1 says " I am claiming an exception from the imposition of the estimated payment penalty because I qualified for federal relief under IRC Section 6654."

The box next to line 1 is already checked when I open the form 221, but I can't figure out why it's checked, and the cross-reference for the field is no help.

My client has income > 150,000 both 2018 and 2019 and owes more than $1000 in tax this year, but the program will not let the form calculate a penalty.

[BobKamman]

Abandon all hope of finding logic when you deal with Arizona taxes.  The instructions to the Form 221 clearly state, you do not have to pay the penalty if the total tax on your 2019 federal return minus federal withholding is less than $1,000.  

In other words, you can owe $20,000 to the state and there is no penalty, as long as you don't owe much, if anything, on your 1040 because of sufficient withholding. 

(Last year, it took them six weeks to cash checks for $20,000, but that's a different story.)

ProSeries was populating the 221 with some number on, I think Line 8 -- I delete it.  But I attach the 221 with the X in the box on Line 1, because that's what the instructions tell us to do.  

[katie2]

Thank you, Bob!  I missed that it was referring to federal relief.  Long days.