Why underpayment penalty

It depends.

Generally, you'll have to pay an underpayment penalty for 2021 if you owe more than $1,000 in taxes (after taking withholding into account) and:

 * Your taxes withheld don't cover at least 90% of your 2021 tax liability, or

 * Your taxes withheld aren't at least 100% of your 2020 tax liability if your AGI is up to $150,000 or 110% if your AGI is more than $150,000. (The amount is $75,000 if you're married filing separately.)

Underpayment penalties are also assessed if you don't withhold or pay enough tax on income received during each quarter. In fact, it's entirely possible to get hit with an underpayment penalty even though you paid your tax bill in full by the April deadline or are getting a refund.

To revisit the underpayment penalty section of your return, please follow the instructions below:

1. Sign in to TurboTax and open or continue your return.
2. Search for underpayment of taxes.
3. Select the Jump to link in the search results.
4. The Underpayment Penalties screen will display the penalty amount. 
5. Select Continue to review this section and make any needed adjustments.