It depends. The penalty generally applies when you owe more than $1,000 in federal tax on your tax return. Per the IRS, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, 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.
To review your underpayment, please follow the instructions below:
- Open your return.
- Search for underpayment penalty with the magnifying glass tool at the top of the page.
- Select the Jump to link at the top of the search results.
- Review your underpayment and see if you qualify for an exception.
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