If your circumstances have changed, you may end up owing taxes when you usually get a refund. Common reasons include underpaying quarterly taxes if you're self-employed or not updating your withholding as a W-2 employee.
Common reasons for owing taxes include insufficient withholding, extra income, self-employment tax, life changes, and tax code changes.
Yes, TurboTax will automatically calculate an underpayment penalty based on failing to pay estimated taxes or having enough withholding (if one is due). During the interview, TurboTax will prompt that you are being charged for an underpayment penalty but it tends to come up as one of the very last items before filing.
Probably the most common reason is working multiple jobs. It's also possible that your job did not withhold the correct amount of tax, but that's still on you. You don't come out any worse, by the way--any money that wasn't withheld came in your paycheck.
For single filers with one job, it can be difficult to decide whether to claim 0 or 1 allowances. If you'd rather get more money with each paycheck instead of having to wait for your refund, claiming 1 on your taxes is typically a better option.
There are a variety of reasons this can happen, including receiving unemployment income or taking on an additional job. New sources of income: If you started receiving income that's not subject to automatic withholding, you can end up owing additional tax.
If you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax.
You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.
It could be one big change or several changes that made an impact: Filing changes – But big life changes, such as marriage, divorce, retirement or adding a dependent (having a baby, adopting) can affect the your tax situation such as the filing status for which you are eligible and other aspects of how you are taxed.
The lingering impacts of the pandemic, including changes in income sources, tax relief expirations, and new legislation, have all contributed to changes in tax liability. These factors might explain why you owe taxes in 2024.
Typically, you would owe state tax because there was not enough tax withheld from your paychecks to cover your liability for state tax. You might owe state taxes even when you owed nothing to the Federal government because Federal and state governments have different tax brackets.
Because of a correspondence backlog at the IRS, many payments have not yet been processed. Until that is done, those taxpayers' accounts reflect balances due even though the taxes have been paid.
If a taxpayer refund isn't what is expected, it may be due to changes made by the IRS. These changes could include corrections to the Child Tax Credit or EITC amounts or an offset from all or part of the refund amount to pay past-due tax or debts. More information about reduced refunds is available on IRS.gov.
Call the IRS.
You can contact the IRS directly at 800-829-1040 to ask about any back taxes you may owe. Have your Social Security number and any relevant tax documents ready when you call, such as your prior-year tax return, tax returns you're calling about, and any correspondence the IRS sent to you.
If you want to avoid a tax bill, check your withholding often and adjust it when your situation changes. Changes in your life, such as marriage, divorce, working a second job, running a side business, or receiving any other income without withholding can affect the amount of tax you owe.
by TurboTax• 795• Updated 1 week ago
IRS Form 2210 calculates the penalty for underpaying your estimated taxes. We'll automatically generate Form 2210 if your return needs it. Follow these steps if you need to make any adjustments: Open or continue your return.
Taxpayers must generally pay at least 90% of their taxes due during the previous year to avoid an underpayment penalty. The fine can grow with the size of the shortfall. Taxpayers can consult IRS instructions for Form 2210 to determine whether they're required to report an underpayment and pay a penalty.
If your tax refund is lower than you calculated, it may be due to a tax refund offset for an unpaid debt such as child support.
The money is withdrawn from your bank account on the date you specify (if filing by tax deadline) or when your return is accepted (if filing after tax deadline).
TURBOTAX ONLINE GUARANTEES. 100% Accurate Calculations Guarantee: If you pay an IRS or state penalty or interest because of a TurboTax calculation error, we'll pay you the penalty and interest.
“The best strategy is breaking even, owing the IRS an amount you can easily pay, or getting a small refund,” Clare J. Fazackerley, CPA, CFP, told Finance Buzz. “You don't want to owe more than $1,000 because you'll have an underpayment penalty of 5% interest, which is more than you can make investing the money.
Conversely, if the total number of allowances you're claiming is zero, that means you'll have the most income tax withheld from your take-home pay. Allowances matter. If you don't claim enough of them and you have too much money sent to the government, you'll end up with a tax refund.
The IRS has a limited window to collect unpaid taxes — which is generally 10 years from the date the tax debt was assessed. If the IRS cannot collect the full amount within this period, the remaining balance is forgiven.