How do I know if I had to pay an underpayment penalty?

Forum|Forum|2 years ago
March 30, 2024
1 reply
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I filed last weekend and owed a lot due to RSUs, ESPP, and capital gains. I recently chatted with a friend who mentioned there is a penalty for not withholding enough. I made no estimated tax payments and claim zero exceptions. Is there an easy way I can tell if paid this penalty by looking at my tax return?

Best answer by VolvoGirl

Yes the underpayment penalty will be on 1040 line 38. It either reduces a refund on line 35a or is included in the tax due on line 37.

VolvoGirlAnswer

Employee

Yes the underpayment penalty will be on 1040 line 38. It either reduces a refund on line 35a or is included in the tax due on line 37.

litex2xAuthor

Looks like I didn't owe any taxes. Maybe I misunderstood the rule. Is the under payment penalty for not withholding enough or for something else?

VolvoGirl

Employee

Yes it's for not paying enough withholding. If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Even if you are getting a refund you can still owe a penalty for not paying in evenly during the year. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. It is included in your tax due or reduces your refund.