I have an underpayment penalty this year. I paid $0 last year. My understanding is I should qualify for an exception due to this. What am I missing?

[wolfewl]

I retired last year and just assumed I could pay my taxes in one lump sum.

[Vanessa A]

Yes, if you had no tax liability for 2023, then yes, you would be able to claim the exception to the penalty. 

If you are seeing a penalty, you can go back into the program under Other Tax Situations>>Additional Tax Payments>>Underpayment penalties and select start or update next to Underpayment Penalties. These questions are meant to help you apply for the exemption to the penalties.

Some exceptions to the penalty are 

• You had $0 tax liability in 2023
• You paid 100% of your 2023 tax liability
• You paid 90% of your 2024 tax liability 
• You or your spouse (if you file a joint return) retired in the past 2 years after reaching age 62 or became disabled and you had reasonable cause to underpay or pay your estimated tax late

[wolfewl]

Thank you!

I'm afraid I worded my question incorrectly, but, I think I still qualify for an exception.  When I said, "I paid $0 last year" I did have a tax liability, but it was paid in full and I received a small refund.  This qualifies me, correct?

Sincerely,

Bill

[ThomasM125]

You may not qualify. Since you had a tax liability in the previous year, you need to pay estimated taxes quarterly to match that liability. Since you didn't do that, you will be subject to a late payment of tax penalty if your unpaid tax is more than $1,000 when you file your tax return.