Filled Exempt and end up owing

Forum|Forum|3 years ago
February 17, 2023
2 replies
25 views

So I filed tax exempt and end up owing about $1,000. I was just wondering if I’ll be penalized for doing so. I thought I qualified for exempt and would not owe this year. The prior year i made less than $12k and this year made around $22k. I’m just nervous about penalties and thought I qualified.

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CatinaT1

Level 15

Maybe. The IRS has a "pay as you go" system, which means you're supposed to pay taxes throughout the year as you earn or receive income rather than sending a lump sum to the IRS at the end of the year.

You say you owe about $1,000. If you owe more than $1,000 when you calculate your taxes, you could be subject to a penalty.

The IRS has two "safe harbor" methods for determining whether you are subject to a penalty. If you meet one of these safe harbor amounts, the IRS won't charge an estimated tax penalty, even if you owe more than $1,000 at the end of the year. Since you did not have a balance due last year, you should be okay.

Guide to IRS Tax Penalties

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Hal_Al

Level 15

Don't obsess too much. The penalty is only assessed on the amount owed over $1000 and is only about 5%. The IRS will bill you, if it's enough to bother with.

You can opt to have TT calculate and include the penalty.