Do you owe taxes this year? If so, then this is why you would have an underpayment penalty. The IRS requires a pay as you go system. This means, in order to avoid penalties and interest you must pay as you earn the money whether you are self-employed or an employee.
If your total withholdings for the year were not enough to cover your tax liability, you may be subject to a penalty.
You can fill out form 2210 to see if you are able to not have the penalty assessed. In order to qualify you would have had to:
- Pay 90% of your total tax for 2024 or,
- Have a tax due of less than $1,000 or,
- paid 100% of your 2023 taxes during the 2024 tax year.
As you walk through TurboTax you will be asked if you want to apply for the penalty waiver, answer yes and if you meet one of the above criteria, the penalty will be waived.
If you owe taxes this year, you may want to consider filling out a new W4 with one or both of your employers. You can choose to have an additional amount withheld or choose a different filing status such as married filing separately which will cause you to have more withheld each pay.
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