Why am I getting an underpayment penalty if I'm W2?

Are you having enough withholding taken out each pay period?  You may need to give your employer an updated W-4 form.   The IRS levies underpayment penalties if you don't withhold or pay enough tax on income received during each quarter. Even if you paid your tax bill in full by the April deadline or are getting a refund, you may still get an underpayment penalty.

To possibly reduce or eliminate your underpayment penalty, open your return in TurboTax and search for annualizing your tax (use this exact phrase). This will take you to the underpayment penalty section, and we'll take you through the steps to possibly reduce what you owe.