In general, UNDERPAYMENT OF ESTIMATED TAX PENALTIES can be avoided if:
- You owe LESS THAN $1,000 after subtracting withholdings and credits, OR
- If you paid the smaller of:
-> AT LEAST 90% of the Tax for the CURRENT YEAR Tax Return, OR
-> 100% of the Tax from the PRIOR YEAR Tax Return.
Based on your paystubs you can estimate if you potentially will be facing penalties and you can make adjustments on your IRS Form W-4 accordingly. In addition, the IRS (and others) provide a calculator to perform these estimates.
About Form W-4, Employee's Withholding Certificate
Tax Withholding Estimator
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