Estimated Tax Penalty

[ecarbone]

I just completed by 2021 return and I owe $5200.  My total tax was $26,322 and total payments for the year was $21,122.  Just below it there is a line that says "Estimated tax penalty" $53.  For a grand total of -$5253.  What is this estimated tax penalty?

[LeonardS]

The U.S. tax system operates as a pay-as-you-go system. What this means is that you must pay your taxes as they occur.  For example, If your estimated tax payment for the first quarter is less than the amount required for the income earned you will incur an underpayment penalty.  This penality is not deleted by any future estimated tax payments even when the estimates exceed the minimum required to avoid a penalty for the quarter.

[Mike9241]

generally withholding and timely estimated tax payments must equal or exceed 90% of the current year tax or 100% of last year's tax (110% if your prior year's agi was over $150k) to avoid penalty. take these rules into account for the 2022 tax year or you again will be subject to penalties.