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Mysunsai t1_jadwwfo wrote

The underwitholding penalty is currently 7%, it varies semi-annually based on the federal short term rate.

If you routinely underpay, you will be subjected to backup withholding and the IRS will require your employer/bank/brokerage/etc. to withhold from all income irrespective of your instructions.


jayseaz OP t1_jadx6p7 wrote

Interesting, good to know. I have always claimed 0 over the years.


kylejack t1_jadxjba wrote

One thing you can legitimately do is adjust your withholding so you get either a small or no refund, which will put more money in your pocket earlier.


rbnhd_f t1_jae3q9x wrote

Where “can legitimately do” = “if you are doing it correctly”.


kylejack t1_jae3zkj wrote

Everything should always be done correctly and not incorrectly, that much is true.


rbnhd_f t1_jae6wbj wrote

Haha, exactly! I just wanted to make it clear that this is not a secret tax hack or anything, this is the normal thing that almost anyone would save some $$ by doing.


kylejack t1_jae7apr wrote

Considering how often it comes up here and how often people are confused by it, it may as well be a secret to be discovered.


rbnhd_f t1_jae869v wrote

No kidding. Tax season, there are so many posts like “how can I possibly owe money, I can’t believe it, I got a giant refund last year”.