Tax Withholding multiple jobs

[Tax1219]

For Example, If you do multiple jobs and owe taxes like  $10000 while filling tax end of the year does that mean you have to pay the Tax Penalty for not witholding correctly? 

[VolvoGirl]

Probably.  For W2 income?  You should have more taken out or send in some extra quarterly estimated payments.  If you have more than 1 W2 job, it's common that the more income you make you pay a higher percent for tax.  And each job only withholds like it is your only job.  

If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year.  Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.

[Terri Lynn]

Hello, Tax 1219, and thank you for joining us!

You asked, if you will have to pay a tax penalty for not withholding correctly, if you owe $10,000 as a result of underwithholding from multiple jobs.

This will depend on your particular situation. The general rule for avoiding the underpayment penalty  is that you must pay your taxes as you go throughout the year through withholdings, or by making estimated tax payments.. Generally, most taxpayers will avoid this penalty, if they either owe less than $1,000 in tax, after subtracting their withholding and refundable credits.  One can also avoid the penalty, if  they pay,  withholding and estimated tax of at least 90% of the tax for the current year return, or 100% of the tax shown on the return for the prior year, if you earn under $150,000,  and 110% of the tax shown, if  you earn over $150,000.  

The penalty for underpayment of estimated tax is calculated based on:

• The amount of the underpayment
• The period when the underpayment was due and underpaid
• And the interest rate for underpayments, as provided by the IRS

For more information on this topic and other tax related  penalties, please refer to:

Penalties 

Hopefully this helps!

Terri Lynn, EA