The underpayment penalty has nothing to do with the Standard deduction. It is only based on the amount of tax you owe, and when it was paid.
Did you have taxes withheld from all of your other sources of income?
If you didn't, and you owe over $1,000, you will have an underpayment penalty.
The underpayment penalty will be assessed if any of these apply:
- "If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty."
- "You also may have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return."
To avid the under payment penalty:
- The amount you owe is less than $1,000, after subtracting withholding and refundable credits.
- You paid 90% of the tax that you owed for the current year.
- You paid 100% of the previous year tax, (110% for higher incomes).
- If your previous year's adjusted gross income was more than $150,000 you will have to pay in 110% of your previous year's taxes to satisfy the "safe-harbor" requirement.
"Typically, underpayment penalties are 5% of the underpaid amount, and they're capped at 25%.
Underpaid taxes also accrue interest at a rate that the IRS sets annually."
To avoid this situation it is recommended that you adjust your W-4 with your employer or pay estimated taxes.
Underpayment of Estimated Tax by Individuals Penalty
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