If you didn't pay in enough taxes during the year and end up with a balance due of $1,000 or more, you could be subject to an Underpayment Penalty. Two exceptions from this Penalty that may apply in your case include:
- Having total withholding and estimated payments during the year equal to at least 100% of your Prior Year's Tax (110% if your Adjusted Gross Income was over $150,000, $75,000 if Married Filing Separate)
- You were a U.S. citizen and had no tax liability on your previous year's tax return
If you normally receive a refund but owe this year, I would highly recommend you compare this year's Tax Return to last year's Tax Return line by line to pinpoint any differences. Doing this may help you find a mistake or help you see exactly what is causing you to owe money this year.
There are many reasons that you could end up owing money this year when you received a refund last year. Some of the most common reasons include:
- Your Income Increased or Decreased
- Your Federal and/or State Tax Withholding as a Percentage of Wages decreased
- You deferred less income into your Employer-Sponsored Retirement Plan or Flexible Savings Plan
- You have a type of income this year that you did not have in previous years (Capital Gains, Dividends, Interest, 401(k) Distribution, Etc.)
- You qualified for a Tax Credit last year that you didn't qualify for this year
- You deleted a Dependent or your Dependent reached the age of 17 during the year
- You changed your Filing Status
- If you Itemize, your Itemized Deductions were lower this year compared to last year
Check out the TurboTax FAQ below for more information regarding a decrease in your refund from prior years:
https://ttlc.intuit.com/replies/3301788
