If there is an underpayment in excess of $1,000 a penalty is applied for the underpayment because the tax system is "pay as you go". In other words when you earn income, the tax is due on that income quarterly unless it is being withheld by the payer, such as an employer withholds tax on wages.
Anyone can wait until
they file their return to pay the tax, but if enough tax isn't paid when money
is earned or received then penalties will be applied for late payment.
There are three quick exceptions to the penalty (if you filed with TurboTax in 2015 and transferred your information
then this is automated without your intervention):
- The tax due is less than $1,000
- If 90% of the current year tax is paid on time through
withholding and/or estimated payments
- If 100% of
the 2015 total tax was paid on time through withholding and/or estimated
payments
The IRS explains the underpayment penalty as follows:
"The United States income tax system is a pay-as-you-go tax system, which means that you must pay income tax as you earn or receive your income during the year. You can do this either through withholding or by making estimated tax payments. If you do not pay your tax or you pay an insufficient amount of tax through withholding, you might also have to pay estimated taxes. If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax."
For full details, you can refer to this link: IRS Topic 306-Penalty for
Underpayment of Estimated Tax
