The Tax Underpayment Penalty is a penalty imposed by the Internal Revenue Service for failing to pay sufficient estimated tax payments or withholding taxes throughout the year.
To avoid this penalty, taxpayers should make sure to calculate their estimated taxes accurately, keep track of their income and expenses throughout the year, and adjust their withholdings if necessary.
A little planning goes a long way to avoiding Underpayment Penalties. Generally, you will avoid the underpayment penalty if you owe less than $1,000 in taxes, or if you paid at least 90% of the taxes due for the current year.
If you are underpaid this year, we can help you determine if you need to adjust your withholdings.
Click here for a quick look at the underpayment of estimated tax by individual penalty.
If you have any questions or concerns regarding your business taxes, please do not hesitate to contact us.