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 IRS

Get the facts about what happens when you owe the IRS and the payment options you may qualify for when you owe and can't pay.

Seize Assets

Get the facts from H&R Block about IRS levies, which seize assets, like your wages, your bank account balance, and more income sources.

IRS Letter 728 – Current Balance Due

Your IRS balance due has been assigned to a Revenue Officer. Learn more about IRS letter 728 and how to handle it with help from the experts at H&R Block.

Inadequate Records

Received a notice that your business has inadequate records? Read the IRS definition and get more insight from the tax experts at H&R Block.