Looking to Avoid Underpayment Penalties?
If you have not paid enough tax, either through withholding or by making timely estimated tax payments, you may be subject to an underpayment penalty when you go to file your income tax return.
The good news is you still have time to make up for any shortfalls in your tax payments for 2015. If you’re in danger of an underpayment penalty, you should consider making up for the shortfall by increasing your withholding on your salary and/or bonuses. Withholding is viewed by the IRS as being paid ratably throughout the year, and could mitigate any penalties; whereas, estimated tax payments late in the tax year for income earned earlier in the year leaves you exposed to penalties for previous quarters.
If you are unsure whether you are in danger of an underpayment penalty or would like to know how much catch-up withholding you would need, if any, contact an Anders advisor.