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New practitioner....relatively speaking. I have a client with an underpayment on Federal tax and the program is getting ready to send $110 with the tax return.....pay with the return. What do seasoned folks do here? Go ahead and let it go, or have the IRS figure it and send the bill. Honestly, I don't think there is a good reason for the penalty....they are just underwithheld.
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" there is a good reason for the penalty....they are just underwithheld."
Actually, that's a pretty darn good reason to have to pay the penalty.
Slava Ukraini!
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$110 is just the penalty? Because if the balance due is under $1,000, there should not be any penalty. It is an open secret that IRS does not assess the penalty if it is under $100, so in those cases I check the box for "Let IRS figure it." For $110 I would probably do the same thing, because you never know when they will raise the allowance. I don't think they charge interest and late-payment penalty on the estimated-tax penalty, but how much would it be anyway?
Just let your client know to expect the bill a few months after filing. It will be good therapy for paying attention to withholding requirements.
