If I’m getting money refunded, why would I owe an IRS underpayment penalty?
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.
If you’ve received unemployment compensation or a state tax refund, you’ll receive Form 1099-G. Learn more about Form 1099-G and how it affects your taxes.
Learn more about IRS Letter 5040 and how to handle an inquiry of your business' income with help from the tax experts at H&R Block.
Learn more about your options to reduce or remove an IRS estimated tax penalty. Get the facts from the tax experts at H&R Block.
Receive an IRS 5600C letter? Learn more about letter 5600C, why you received it, and how to handle it with help from the tax experts at H&R Block.