Is under payment a loan from the gov at 0.5% a month ? Sounds like a good deal to me.
When the Penalty Kicks In
Normally, an underpayment penalty may apply if the amount withheld (or paid through estimated taxes) is not equal to the smaller of 90% of the taxes you owe for the current year or 100% of the taxes you owed for the previous year.6
If a penalty applies, it is typically 0.5% of the amount owed for each month that amount was unpaid.7 Interest charges may also apply.
Also, consider the fact that by overpaying the government, you are literally lending to them interest-free for a whole year. Better to owe and deduct as much as possible.
Is under payment a loan from the gov at 0.5% a month ? Sounds like a good deal to me.
When the Penalty Kicks In Normally, an underpayment penalty may apply if the amount withheld (or paid through estimated taxes) is not equal to the smaller of 90% of the taxes you owe for the current year or 100% of the taxes you owed for the previous year.6
If a penalty applies, it is typically 0.5% of the amount owed for each month that amount was unpaid.7 Interest charges may also apply.
Also, consider the fact that by overpaying the government, you are literally lending to them interest-free for a whole year. Better to owe and deduct as much as possible.