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Why do I have a tax liability charge? Turbo Tax told me last year to pay quarterly tax payments but my income substantially decreased in 2021 so I did not pay.

 
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LeonardS
Expert Alumni

Why do I have a tax liability charge? Turbo Tax told me last year to pay quarterly tax payments but my income substantially decreased in 2021 so I did not pay.

From your post, it appears that you were required to pay estimated taxes although your income decreased substantially.  The U.S. tax system operates as a pay-as-you-go system. What this means is that you must pay your taxes as they occur or you will be assessed an underpayment penalty.  

@pam35337

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2 Replies

Why do I have a tax liability charge? Turbo Tax told me last year to pay quarterly tax payments but my income substantially decreased in 2021 so I did not pay.

Your tax owed was greater than estimated tax paid. If you are self employed you have to pay self employment tax even if your regular income tax is zero. 

LeonardS
Expert Alumni

Why do I have a tax liability charge? Turbo Tax told me last year to pay quarterly tax payments but my income substantially decreased in 2021 so I did not pay.

From your post, it appears that you were required to pay estimated taxes although your income decreased substantially.  The U.S. tax system operates as a pay-as-you-go system. What this means is that you must pay your taxes as they occur or you will be assessed an underpayment penalty.  

@pam35337

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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