Why underpayment penalty? We are W-2 employees. I did start receiving Soc. Sec payments in 9/17. Does this require an estimated pmt? Last quart. of 2016?

[viktoriyab11 · Accepted solution]

Federal tax underpayment scenarios can arise for salaried (W-2) workers as well. This situation occurred when you didn't withhold enough taxes from your paychecks, if you claim the wrong number of allowances on your W-4, you could wind up in an underpayment scenario. Similarly, if you're a salaried worker who earned a lot of outside income during the year (say, through investments), you could easily wind up underpaying your taxes even if you filled out your W-4 correctly.

Please follow this link for more information about Penalty for Underpayment of Estimated Tax https://www.irs.gov/taxtopics/tc306