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lucie2684
New Member

Why am I penalized 343 for underpayment?

Why am I paying a penalty when I pay my taxes in full once each year?
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2 Replies
SusanY1
Expert Alumni

Why am I penalized 343 for underpayment?

The US tax system is a "pay as you go" system, meaning that the tax is due as the income is earned, not at the end of the tax filing year.  When sufficient taxes weren't paid or withheld throughout the entire year, there is a penalty applied for failure to make timely estimates or have appropriate withholding through payroll.  

You can learn more about this penalty HERE.

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Why am I penalized 343 for underpayment?

If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year.  Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, 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. It is included in your tax due or reduces your refund.

 

You might be able to eliminate it or at least reduce it.  You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.  It's form 2210.

 

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Federal or Personal (for Home & Business Desktop)

Other Tax Situations

Additional Tax Payments

Underpayment Penalties - Click the Start or update button

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