In general, you may owe the penalty for 2023 if the total of your withholding and timely estimated tax payments didn't equal at least the smaller of:
- 90% of your 2023 tax, or
- 100% of your 2022 tax. Your 2022 tax return must cover a 12-month period.
The IRS levies a penalty for underpayment of estimated tax if you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments.
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.
Refer to Penalty for Underpayment of Estimated Tax
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