Just received underpayment penalty notice from New Jersey, how to double check penalty and also avoid this next year?

Forum|Forum|1 year ago
July 8, 2024
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Received a notice from the state indicating installment interest due because of underpayment (my firm didn't withhold my NJ taxes because I work in Manhattan). I wasn't sure how to check if this amount is accurate and also how to avoid this underpayment penalty next year (same situation applies as last year)?

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Mike9241

if NJ didn't send you a calculation you can use this form

https://www.nj.gov/treasury/taxation/pdf/current/2210.pdf

to avoid the same thing for 2024, ask your employer if it will withhold NJ taxes. They are not required to do so in most case. if they do, you'll need to have extra withheld to make up for the first part of the year when nothing was withheld. the target is 100% of your 2023 NJ taxes (it should be line 50 of NJ form 1040. if they won't all you can do is make estimated tax payments to get to the 100%. however, estimated tax payments only count when made so you will be subject to penalties for the early part of 2024.

see this link for making estimated tax payments

https://www.nj.gov/treasury/taxation//njit20.shtml

in fact the required payment is the smaller of 4a or 4b from the 2210 for 2024. however knowing what your 2024 taxes will be is sometimes not possible.

Hal_Al

Employee

If the balance of tax due with your return is more than $400, and you did not pay your required estimated payments (or withholding), you may be charged interest on the underpayment. This is true even if you pay all the tax due by the return due date.

https://www.nj.gov/treasury/taxation/njit21.shtml