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 making estimated tax payments.
In order to not be be charge an underpayment penalty you must:
- Prepay 100% of the previous year's tax return or
- 90% of the tax on the current year's return or
- Owe less than $1,000.
The penalty for late payment is generally 0.5 percent of taxpayers’ unpaid taxes per month. It can build up to as much as 25 percent of their unpaid taxes.
You can request a waiver of this penalty from the IRS if you have not requested a penalty waiver in the last 3 years.
HERE for more information on this waiver program from the IRS
If you change your withholdings and the program does not get reinstated, you could owe a large tax amount at the end of the year. My suggestion would be to not change your withholding until the reinstatement of the EV credit then review your tax situation at that time. It much better getting a larger refund than owing a large amount at the end of the year.
