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I don't understand underpayment penalty, never had this before.

why I'm I getting underpayment penalty never had this before.
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I don't understand underpayment penalty, never had this before.

It means you did not pay enough tax during the year through withholding or quarterly estimated tax payments to meet the requirements to avoid and underpayment penalty. The IRS requires that tax payments be made throughout the year as you receive income. 

Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid 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.


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