DianeW777
Expert Alumni

Get your taxes done using TurboTax

Withholding is not the only consideration. However if estimated payments were not paid on time (April, June, September and January), then there can be a shortfall in any one of the quarters which will create the underpayment penalty.  This can occur even if you have a refund and even if you, in total, meet the 100% or 110% depending on income (prior year tax liability) or 90% of the current year tax or $1,000 total tax due.

 

The IRS system is 'pay as you go' meaning when the taxable income occurs, they want the tax at that time and not at the end of the year.

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