The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments.
If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen.
For additional information, please refer to IRS Publication 505.
If you did pay 100% of your tax liability from the previous year, you would need to fill in that information in the program by using the following directions.
Online
Dashboard
From within your TaxAct return, click Taxes & Miscellaneous.
On smaller devices, click the menu at the top left corner of your screen, then make your selection.
Click the Additional Tax Payments drop-down.
Click Add beside Underpayment Penalty.
Complete the rest of the interview process.
Classic
From within your TaxAct return, click Federal.
On smaller devices, click the menu at the top left corner of your screen, then make your selection.
Click Underpayment Penalty near the bottom of the list.
Complete the rest of the interview process.
Desktop
From within your TaxAct return, click Federal.
Click Underpayment Penalty on the right-hand side, near the bottom of the list.
Complete the rest of the interview process.
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