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There are underpayment penalties imposed unless:

The total of your withholding and timely estimated tax payments didn't equal at least the smaller of:

1. 90% of your current year's tax liability, or

2. 100% of your previous year's tax liability. Your previous year's tax return must cover a 12-month period.

* If your adjusted gross income (AGI) for the previous year was more than $150,000 ($75,000 if your previous year's filing status was married filing separately), substitute 110% for 100% in (2) above.

Also, there is no underpayment penalty if the total tax shown on your current year return minus the amount of tax you paid through withholding is less than $1,000.

The most confusing part of the underpayment penalty is that it is calculated for each required payment individually. From the IRS instructions for Form 2210 (underpayment penalty calculation):

Penalty figured separately for each required payment. The penalty is figured separately for each installment due date. Therefore, you may owe the penalty for an earlier due date even if you paid enough tax later to make up the underpayment. This is true even if you’re due a refund when you file your tax return. However, you may be able to reduce or eliminate the penalty by using the annualized income installment method. For details, see Schedule AI Annualized Income Installment Method, later. (Schedule AI is found on page 8 of the instructions.)

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For example, assume your total tax liability was $10,000, you had no withholdings at all and you made a single $10,000 payment on January 15 (timely payment for the fourth due date). The first quarter payment of $2500 would be about nine months late, the second quarter payment would be about six months late, and the third quarter payment would be about three months late. There would be underpayment penalties for each of those quarters, even though the total amount was paid in full.

It is quite common to have an underpayment penalty even if you get a net refund when you file your tax return.

The quote from the instructions mentions an Annualized Income method that you can use to reduce your penalty. You would want to do this if your income were not relatively even throughout the year. For instance, in that above scenario, what if all of your taxable income arrived in December? Then making a payment for the Jan 15 date would be the exact right answer. But, to do that, you have to give the IRS the information necessary to break free of its assumption that everything happened ratably throughout the year.