Hello, Bikers,
It is possible to get the penalty waived in some situations. However, I agree with you. For $135 I would and I have just paid the penalty, even when I shouldn't have been charged (in my case, the state did not take into account my uneven income through the year, but like you say...I would have spent the money explaining to them why I shouldn't have to spend the money. Consider it my contribution to my wonderful state of residence ;-).
There is usually an easy way to avoid the penalty--pay in more for the next year than you owed in total the last year. This is not the amount due on your 1040, but the total tax. Let's say my total tax in 2021 was 10,000. If I send in $10,100 by April 15, 2022, I will be exempt from the (US federal) penalty in 2022. At an interest rate of 0.1% that is a loss of interest of $10 for the year, some or all of which I would have had to pay along the way anyway.
If your state also collects income tax, usually something similar will work, but I haven't checked every state to verify this.
AND it's also good practice to monitor your income and pay in extra any quarter that you have extra income, so you're also caught up as you go along, since estimated taxes are due through the year as you earn income.
