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Underpayment penalty

January 11, 2017 • Anonymous • Log In to Post Comments

Just received a call from the FTB related to Form 5805 I filed for TP in 2015.

TP has uneven withholding due to a bonus received in Q1, so I completed page 4 of 5805 showing the uneven withholding.  FTB states that I ALSO need  to fill out page 3, which is the annualized income installment method.  But that contradicts the uneven withholding scenario.   Don't we only fill out either Page 3 OR page 4? The uneven withholding scenario wouldn't even make sense if I have to correlate a large bonus to uneven withholding?

Am I incorrect?  Is the FTB incorrect, and if yes, what do I say besides what I already said above?




I'm assuming the uneven withholding reduces the underpayment penalty. If you spread it out over the year, you are underpaid, right? If you would owe no penalty if the withholding is evenly spread, you should do it that way. I do beleive you must annualize. That said, if their prior year tax was paid through withholding with no more than $500 due and/or paid in estimates there would be no penalty.


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