underpaying withholding penalty?

[Mick88]

While calculating our 2023 taxes I discovered that our withholding was $3000 short of the calculated Federal tax.  ( $9500 withholding, $12,500 calculated tax)  Will we be charged an underpayment penalty?  Do we just file and  pay the calculated tax on time then wait and see if the IRS will charge a penalty ?

[DawnC · Accepted solution]

Maybe.  You may or may not owe a penalty.   If there is a penalty incurred, TurboTax will alert you, and you will be allowed to either calculate and pay the penalty or you can elect to allow the IRS to figure the penalty and bill you later.   You won't have to pay the penalty if you can show reasonable cause for the failure to pay on time.   TurboTax will show you the waiver option available if you do in fact incur a penalty.  

The IRS charges a penalty for various reasons, including if you don’t:

• File your tax return on time
• Pay any tax you owe on time and in the right way
• Prepare an accurate return
• Provide accurate and timely filed information returns

They may charge interest on a penalty if you don’t pay it in full.   They charge some penalties every month until you pay the full amount you owe.  Understand the different types of penalties, what you need to do if you get a penalty, and how to avoid getting one.

To verify your penalty status in TurboTax now, search for penalty and use the Jump to penalty link.