Last Chance to Avoid Underpayment Penalty
January 15 is the deadline for 2009 estimated tax payments.

If you didn’t pay enough to the IRS through payroll withholding or quarterly estimated tax payments last year, you could face a big tax bill when you file your 2009 tax return this spring.
Plus, you might owe significant interest and penalties, too. (Penalties apply only if you owe more than $1,000 when you file your tax return).How could that happen? The tax withholding on your paycheck may be out of whack. Or perhaps you received a big gain from selling stock, or you took an early distribution from a retirement account that is subject to taxes and penalties. In any event, if the amount you paid during the year isn’t equal to 90% of the taxes you owe for 2009 -- or 100% of what you owed for 2008 -- the IRS can slap you with an underpayment penalty. (If your 2009 adjusted gross income is over $150,000, you need to have paid 110% of what you owed for 2008.)
The penalty for underpayment works like interest on a loan (the money you didn’t pay the government on time); the current rate is 4% a year. If you might come up short, making an estimated tax payment by January 15, 2010, can reduce the penalty you’ll owe when you file your return. Use Form 1040ES to make the payment.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The IRS may waive the penalty if you can show the failure to pay estimated tax was due to a casualty, disaster or other unusual occurrence, or if you retired or became disabled during the year. To apply for a waiver, attach an explanation to Form 2210 to document the reasons for your request.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

-
Amazon Ends Free Shipping Benefit Sharing with Non-Household Members
Starting October 1, Prime members will no longer be able to share shipping perks with those outside their household.
-
Big Tech Names Rise Above Broad Weakness: Stock Market Today
Some familiar names enjoyed solid rallies on the resolution of outstanding questions, but macro uncertainty hangs over the broader market.
-
Over Age 65? New $6,000 'Senior Bonus' Deduction Is Available Even If You Itemize
Tax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
Another State Rebels Against Trump’s New 2025 Tax Law: What Now?
State Taxes Even if states adopt tax policies in the so-called ‘big beautiful bill,’ lawmakers may have workarounds at their fingertips.
-
Ask the Editor, August 29: Tax Questions on Estate and Gift Taxes
Ask the Editor In this week's Ask the Editor Q&A, we answer questions from readers on estate and gift taxes.
-
Will You Get a ‘Surprise’ Tax Bill on Your Social Security Benefits in Retirement?
Retirement Taxes Social Security benefit payments might land you in hot water when filing 2025 taxes — here are three reasons why.
-
Ask the Editor, August 22: Tax Questions on What Congress Will Do Next
Ask the Editor In this week's Ask the Editor Q&A, we answer questions from readers on what Congress will do next with taxes.
-
Stay NJ Could Give You $6,500: The Deadline You Can't Miss
Property Taxes New Jersey has a new property tax relief program for 2025. The application deadline is approaching fast.
-
Ask the Editor, August 15: Tax Questions on the OBBB, Tax Rates
Ask the Editor In this week's Ask the Editor Q&A, we answer tax questions from readers on the OBBB and changes, if any, to tax rates.
-
The Fall Garden Tax? What to Plant and How to Prepare
Tax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.