Question

If I’m getting money refunded, why would I owe an IRS underpayment penalty?

Answer

The IRS calculates underpayment penalties separately for each of the four periods of the year. This means you can end up owing a penalty for an earlier payment period even if you paid enough later in the year to make up for it. To avoid this, and the need to complete Form 2210, you must make accurate estimated payments for the tax year by these dates:

  • April 15
  • June 15
  • Sept. 15
  • Jan. 15

If your income changed throughout the year, you could lower or eliminate one or more estimated payments. To do so, use the annualized income installment method on Form 2210.

Related Topics

Related Resources

Owe Taxes

Get the facts from H&R Block about what happens when you owe taxes, and the options you may have when you owe taxes and can't pay.

When Not to File an Amended Return

Don't confuse the IRS and make your situation worse by filing an amended return when you shouldn't. Learn more from the tax experts at H&R Block.

IRS Letter 3219 – Notice of Deficiency, Increase in Tax and Notice of Your Right to Challenge

Learn more about letter 3219, why you received it, and how to handle an IRS notice of deficiency with help from the tax experts at H&R Block.

6 Ways to Maximize Your Refund

Think it's too late to make a difference on this year's tax return? Think again! Learn how to maximize tax deductions and increase your refund with H&R Block.