Please clarify you situation.
- You were talking about your state tax returns. Did you switch to your Federal?
- Are you seeing a penalty on line 38 of your 1040 tax return?
- How much tax did you owe on line 37?
The underpayment penalty may apply if :
- The amount of tax you paid during the tax year is less than 90% of the tax that you owed for the current year.
- The amount you paid during the tax year did not equal 100%, (110% for higher incomes) of your taxes owed the prior year.
- The IRS also says you can probably avoid the penalty if the amount you owe is less than $1,000, after subtracting withholding and refundable credits.
To avoid this situation it is recommended that you adjust your W-4 with your employer, or pay estimated taxes.
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