@Barb552 wrote:
We received a letter from the IRS stating we incorrectly entered the recovery rebate credit and that we owed 171.71. Would that mean we should now be paying estimated taxed for 2022?
There is no reason to pay estimated taxes for tax year 2022 if all you owe to the IRS on your 2021 tax return is $171.71. Just pay the taxes owed.
Go to this IRS tax topic for underpayment penalties - https://www.irs.gov/taxtopics/tc306
The United States income tax system is a pay-as-you-go tax system, which means that you must pay income tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and refundable credits, or if they paid withholding and estimated tax of 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.
