Last year, I received a $1918 refund from the IRS and owed NY state $0 in tax. This year, I owe the IRS $1285 and the state of NY, $646. I know that I don't have to pay an underpayment penalty for the 2021 tax year but how do I handle the underpayment penalty as a result of my tax liability this year? In other words, I was told by the Turbo Tax Community that because I owe the IRS more than $1000, I have to pay an underpayment penalty for the 2021 tax year. How do I handle this? Do I wait until I receive a bill from the IRS? I know that normally quarterly payments are made to the IRS. Do I have to get involved in that for this small amount? The bottom line question is how do I make the underpayment penalty payment? I don't know anything about an underpayment penalty for NY state.
You may not owe a penalty for underpayment of tax. The IRS will not charge you an underpayment penalty if (a) you pay at least 90% of the tax you owe for the current year, or (b) pay 100% of the tax you owed for the previous tax year (110% if your if your taxable income is $150,000 or more), or (c) you owe less than $1,000 in tax after subtracting withholdings and credits. So, just because you owe more than $1,000 does not mean you will owe a penalty.
You may not owe a penalty for underpayment of tax. The IRS will not charge you an underpayment penalty if (a) you pay at least 90% of the tax you owe for the current year, or (b) pay 100% of the tax you owed for the previous tax year (110% if your if your taxable income is $150,000 or more), or (c) you owe less than $1,000 in tax after subtracting withholdings and credits. So, just because you owe more than $1,000 does not mean you will owe a penalty.