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January 31, 2021
Question

Underpayment penalty

  • January 31, 2021
  • 1 reply
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In December 2020, I received a large employment discrimination lawsuit settlement and it appears I am being assessed for the underpayment penalty. Is annualizing my tax the best way to reduce/remove this penalty since I received the payment at the end of the year?

    1 reply

    January 31, 2021

    Yes, annualizing your income and taxes withheld will probably be the best way to reduce your underpayment penalty as much as possible on Form 2210 since you received the large payment at the end of the year.