Or you have an underpayment penalty. If you do not pay enough tax during the year, 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.
Do you have a penalty on 1040 line 38? It's not for filing or paying late. It doesn't have to do with last year's tax return or not paying estimates for this year. The penalty is an "estimated" amount. It's a penalty if you owe too much or for not paying in enough withholding during the year or not paying in evenly. Even if you are getting a refund you can still owe a penalty. It's very common and normal and expected for the IRS or state to bill you for more or send you a refund.
