Is an underpayment penalty a new thing for 2019? Does it have anything to do with the IRS deadline being changed to July 15 because of COVID?

[sburton]

I currently owe the IRS, but usually pay what I owe when I submit the forms. What is this?

[Texas Roger]

The underpayment penalty has nothing to do with the filing deadline change to July 15. It has been around for years.  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.

[VolvoGirl]

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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[SusanY1]

No, the underpayment penalty is not new.  The underpayment penalty is assessed when you have a balance in excess of $1,000 and the balance that you owe is either less than 100% of your tax owed for the year or 90% of the tax owed in the prior year.

The U.S. tax system is a pay-as-you go system and taxpayers are required to pay taxes either through payroll withholding or at least quarterly throughout the year.  The underpayment penalty is a penalty for failing to make the quarterly payments throughout the year, though when tax balances are below $1,000 or are 90% or less of the prior year balance, the penalty is not triggered.