No, the underpayment penalty doesn't include the underpayment. The underpayment penalty will be reported on your tax return (Form 1040) on line 38. It will be included in your balance due or subtracted from your refund.
The federal tax system is a pay as you go system. As you make money, you have to pay taxes on that money. You may have an underpayment penalty if you didn't have enough taxes withheld from your income throughout the year on your W-2 or if you're self-employed and you didn't pay enough estimated taxes.
To try to reduce or eliminate it, review the TurboTax article Why am I getting an underpayment penalty?
For more information, refer to the TurboTax help article Guide to IRS Tax Penalties: How to Avoid or Reduce Them for tips to use in the future.
You can contact the IRS to request a one-time abatement of your underpayment penalty. For individual tax returns, call 1-800-829-1040, 7 AM - 7 PM Monday through Friday local time.
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